Countryside Partnerships Annual Report 2019

FY2019 Annual Report · Countryside Partnerships

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PLACES
PEOPLE
LOVE

Countryside Properties PLC
Annual report 2019

OUR PURPOSE

We believe in delivering
enduring value by creating

Places People Love

Placemaking is more than
geography – it is a practice
and a philosophy, as much
about the feeling people
experience in their homes
as the physical buildings.

Below: St. Luke’s Park, Essex; Front cover: Beaulieu, Essex

We are committed to

through stakeholder engagement

Employees

Read more on page 21

How we engage
• Regular dialogue with Government and

• Site visit with Secretary of State and key

local Government officials

industry groups

• Ongoing engagement with planning authorities

• Regular communication with other
regulators such as HMRC and HSE

What they tell us
• Industry needs to deliver more homes

Secretary of State for Housing, Robert Jenrick,
visits Acton Gardens, London

• Help to Buy caps to be introduced in 2021

with the scheme extended to 2023

Government policy and regulation have a
significant impact on the housebuilding industry
and therefore Countryside. Regulation and
policies around planning, Help to Buy, health
and safety, quality, fire safety, stamp duty and
leasehold amongst others continually evolve
and therefore we not only need to engage
with Government to help inform it but also
keep up to date with future policy changes.

• Fire safety and leasehold reform under review

• Modern methods of construction and speed
of build required on Homes England sites

What we are doing
• Embracing modern methods of construction

with opening of modular panel factory

• Engaging in policy discussions over key

industry topics

• HMRC site visit

• Active member of HBF contributing

to policy discussion

• Inclusion in the FTSE4Good Index

• Focus on growth in our
Partnerships business

Link to strategic objectives

RESILIENCE

FTSE4Good Index

member

Countryside Properties PLC / Annual report 2019 17

Market review

UNIQUE
RESILIENCE

Despite the wider political
uncertainty, demand for all tenures
of housing remains robust with
support from both national and
local Government. Countryside’s
commitment to offering a balanced
mix of tenure types, unique amongst
other major housebuilders, allows
us to develop sites more quickly and
gives us resilience from any slowdown
in the private for sale market.

Graph 1
Net additional dwellings

350,000

300,000

250,000

200,000

150,000

100,000

50,000

06/07

07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16

16/17

17/18

Net additional dwellings

Estimated required number of new dwellings p.a.

Source: Ministry of Housing, Communities & Local Government.

Graph 2
Help to Buy: Equity Loan – number of legal completions

s
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60,000

50,000

40,000

30,000

20,000

10,000

St Luke’s Park, Runwell

Macroeconomic environment
Despite wider political uncertainty, demand for housing of
all tenures remains robust with support from both national
and local Government. For those looking to purchase their
own home, low interest rates, good mortgage availability,
low levels of unemployment and the extension of Help to
Buy until 2023 have ensured that demand has remained
robust, particularly from first-time buyers.

However, some stresses in the UK housing market started
to emerge during the year, with property sales in the
second-hand market slowing, particularly at higher price
points as a result of the impact of increased stamp duty
together with the uncertain macroeconomic backdrop.
Demand for affordable and PRS housing remained strong.

While the supply of new housing continues to grow steadily,
latent demand is far from satisfied with net additions to the
housing stock lagging significantly behind the totals required.
It has been estimated that over 250,000 and up to 340,000
new homes1 are required in England each year to maintain
the balance of supply and demand (Graph 1). Government
has pledged to deliver 300,000 homes per annum by the
mid-2020s.

Our response
We have expanded our geographic reach significantly over the
past few years and now operate from 13 regional businesses
across London, the surrounding Home Counties, the North
West, the Midlands and Yorkshire. In 2019, we delivered a
total of 5,733 new homes, a 33% increase on the prior year,
making us once again the fastest growing listed housebuilder in
the UK. Our mixed-tenure model and automation allow us
to build out sites more quickly supported by a strong balance
sheet and investment in our employee base to continue this
growth into the medium-term. While house price inflation is
moderating and the higher end of the market remains sluggish,
the impact on Countryside is limited by the strategic decision
we took four years ago to reduce average selling prices to
ensure our product is affordable for local owner occupiers.
We continue to see significant growth opportunities in both
our operating divisions.

Year to March

England total

Of which first-time buyers

London total

Source: Help to Buy: Equity Loan statistical release Q1 2019.

1. Tackling the undersupply of housing in England, House of Commons.

18 Annual report 2019 / Countryside Properties PLC

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Acton Gardens, London

Greenwich Millennium Village, London

Government policy
and future regulation
The new build market makes up approximately 20% of total
housing transactions in the UK. There has been a shift to new
build over the second-hand market over the past five years,
largely as a result of the Government Help to Buy scheme
which is only available on new build properties. While total
housing transactions have remained relatively flat over this
period, second-hand market transactions have reduced.

Based on cumulative data to March 2019, Help to Buy has been
utilised by approximately 221,000 new homebuyers2 (Graph 2)
with an average house price of £260,000. There is a strong
correlation of usage to first-time buyers with 68% of transactions
in the £150,000 to £350,000 price bracket. The Help to Buy
scheme was recently extended to 2023 with utilisation restricted
to first-time buyers and the implementation of regional price
caps from 2021.

Fire safety remains a key area of focus within the industry.
The Government has published its recommendations following
the enquiry into the Grenfell Tower disaster and we anticipate
further changes to building regulations following the review.
The Government has launched two consultations into leasehold
properties and potential reform. The proposals include a ban
on the sale of leasehold houses and plans to lower future ground
rents to a nominal fee. Countryside no longer sells leasehold
houses and has signed the Public Pledge for Leaseholders.

Our response
In 2019, Help to Buy was utilised on 50% of our private
completions excluding bulk sales or 20% of our total
completions, which is strongly linked to the proportion of
first-time buyers (52% of private completions). We ensure
that our product is affordable for local owner occupiers who
represented over 85% of our private completions in 2019.
With the planned changes to Help to Buy from 2023, we are
planning our product to ensure it continues to be accessible
to as many customers as possible who plan to use Help to
Buy within the bounds of the new regional price caps.

The safety of the homes we deliver is of paramount
importance to us. We acted quickly to review all tall
buildings constructed by Countryside following the Grenfell
tragedy, taking corrective action where required. In addition,
this year we have added an external third-party certification
in relation to fire safety for all apartment buildings.

2. Ministry for Housing, Communities & Local Government.

Mixed-tenure approach
In recent decades, the structural undersupply of housing in
England has been partly caused by a lack of new affordable
housing. In addition, there has been a decline in home ownership
in England over the past decade which at c.64% is well below its
2003 peak. There are several reasons for this including restrictions
on mortgages for first-time buyers following the last recession
and historical house price inflation. This has led to a higher
proportion of renters in the marketplace and consequently an
increase in activity in the professional PRS market from both PRS
providers and institutional investors.

The Letwin review published in 2018 also concluded that in
order to meet the 300,000 homes per annum target set by the
Government, measures are needed to promote faster delivery
of homes on large strategic sites. This aligns well with our
mixed-tenure delivery model which reduces our reliance on
the demand for private homes.

Our response
It is a key part of our strategy that we take a mixed-tenure
approach on all our developments and we remain the UK’s
only major housebuilder for which private for sale homes
represented less than half of total completions. In 2019, we
delivered a total of 5,733 new homes, of which 38% were
private for sale, 38% affordable homes and 24% PRS homes.
Our Partnerships division provides a balanced mix of all three
tenure types, enabling rapid growth as well as business resilience.
In our Housebuilding division, we have an industry-leading
owned or controlled land bank within 50 miles of London,
81% of which has been strategically sourced.

24%

38%

Completions

5,733

38+

homes

38%

Private

Affordable

PRS

Countryside Properties PLC / Annual report 2019 19

38
+
24
+
F

Market review continued

Wren Green, Bamber Bridge

Modular panel factory

Labour supply
Following long-term decline, the housebuilding workforce
has been stretched as the industry has expanded in recent
years and has been further impacted by a reduction in EU
workers choosing to work in the UK following the Brexit
referendum. This has led to a shortage of skilled labour on
site and experienced project management staff in our regional
offices. This in turn has increased pressure on staff and
sub-contractor recruitment, remuneration and retention.

Our response
While the industry as a whole has lobbied Government via
the Home Builders Federation to protect the status of EU
construction workers, Countryside has taken a number of
specific initiatives. These include the recruitment of apprentices,
management trainees and graduates into the business,
together with tailored development programmes to further
their careers. We currently have 26 recent graduates and
a further 94 apprentices working in various roles within
the Group. To mitigate labour shortages on site we have
invested in off-site manufacture of modular wall panels
which will be used across all of our Northern and Midlands
regions. The use of this method of construction requires
significantly less site input and allows us to build homes
with more efficiency.

Modern methods of construction
(“MMC”)
MMC is becoming a key Government and industry focal point
both in terms of how housing delivery can be sped up to
meet the 300,000 homes target mentioned previously but
also as a way of improving build quality and building safety.
There are seven different elements to MMC which cover
a range of approaches that encompass off-site, near-site
and on-site pre-manufacturing, process improvements and
technology applications. Although the industry has yet to
fully embrace non-traditional build, several methods of off-site
construction are emerging from use of prefabricated elements
to timber frame construction to complete modular build.
The case for off-site construction continues to grow driven
by benefits including build speed, enhanced quality assurance,
reduced waste on site and the opportunity to do more with
the existing workforce. Indeed, some public procurement bids,
including tenders put out by Homes England, require use of
MMC and commitment to a pace of build in order for
participants to qualify to bid.

Our response
We believe that off-site construction is integral to meeting
our growth plans and securing our supply chain for the future.
We already use off-site timber frame construction on 60%
of our output, and in March 2019 we opened our first modular
panel factory in Warrington to supply our Partnerships
North businesses. This factory has a semi-automated
production line which fabricates a closed panel including all
windows, first-fix plumbing and electrical channels, insulation
and plasterboard. We delivered 376 homes from the factory
in 2019 with plans for around 1,400 to be delivered in
the 2020 financial year.

During the year we secured two new schemes at Tattenhoe,
Milton Keynes, and Burgess Hill, West Sussex. Both of these
schemes were put out to tender by Homes England with
a prerequisite that the developer uses MMC.

20 Annual report 2019 / Countryside Properties PLC

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FOR GOVERNMENT

Enfield regeneration
Elements, launched for sale in September 2018, is Countryside’s
£310m regeneration project in Enfield. Working closely with
Enfield Council to regenerate the existing 1960s Alma Estate,
Countryside is delivering 993 new homes with 14,000 sq m
of public open space. When completed in 2028, Elements will
be a sustainable and integrated new community served by
almost 47,000 sq ft of new community facilities, including a
new youth centre and community hall, as well as 21,000 sq ft
of commercial space which will include retail units, a gym
and a medical centre.

Countryside has a proven track record of successful partnerships
with local authorities on regeneration projects. The Alma
Estate regeneration was recognised within the Mayor of
London’s good practice guide to estate regeneration; it is a
real accolade that our approach to this regeneration scheme
has been so highly regarded.

Peter George, Assistant Director of Regeneration and Planning
at Enfield Council, states there is a good partnership between
the council and Countryside, and the reason Countryside
won the Alma Estate regeneration at Ponders End was
down to the overall vision for the area. Peter comments:
“It was their overall offer and vision; they were equally
strong in terms of their planning and design proposals, all
the way through to their financial and commercial proposals.”

Peter continues: “Enfield looks at regeneration projects in
the context of improving and revitalising neighbourhoods.
Not just about delivering housing projects, it is about
creating places.”

Placemaking is at the heart of Countryside’s vision and
community involvement is a key focus area for the Group.
Understanding the local area and ensuring the residents’ needs
are considered are vital. Thorough consultation processes
with local residents are undertaken on all of Countryside’s
regeneration schemes. Countryside ensures the residents
are involved from the beginning, starting at the bid stage,
throughout the planning and into the construction phase.
There is continual communication throughout the project
that continues into the aftercare.

Elements, Enfield

School visit to Elements, Enfield

Francis Carolan, Vacant Possession Manager, Housing
Development & Renewal at Enfield Council, comments
on how involved Countryside was with consultation events
with the residents. Through a series of workshops, the
residents helped have an influence over the design of the
new build homes. Francis states: “When you have a
partnership that is working, it is that trust, and understanding
the aspirations of residents. Meanwhile, ensuring they gain an
understanding of the council’s point of view and our role in
providing homes and our responsibility to safeguard them.”

Kishore Perla, Regeneration & Development Consultant
at Enfield Council, adds: “Countryside are very good at
partnerships and they give a lot of importance to design
and quality, keeping this at the heart of everything they do.
Countryside manage the construction process very well;
they keep people informed and ensure the impact on the
residents is minimal.”

Countryside has established a reputation for being transparent,
hardworking and straightforward, with a real concerted
effort to make sure we deliver on all our promises.

Countryside are very good at
partnerships and they give a lot of
importance to design and quality,
keeping this at the heart of everything
they do. Countryside manage the
construction process very well.”

Watch how we work
with our partners
at Enfield.

http://qrs.ly/y1ay6f4

Countryside Properties PLC / Annual report 2019 21

Our strategy

OUR STRATEGY FOR CREATING
Places People Love

Delivering sustainable growth and superior returns from our balanced business
model through the cycle with a commitment to quality and integrity.

Strategic priority

Our approach

GROWTH
Sector-leading growth

We aim to deliver sector-leading growth from
our mixed-tenure delivery in Partnerships
and developing our industry-leading land
bank in Housebuilding.

• Growth in sites under construction and

open sales outlets

• Accelerated build from mixed-tenure delivery

• Private selling prices set to target areas

of strongest demand

• Geographic and organic growth

of Partnerships

Kings Hill, Kent

• Revenue growth from increased volume

RETURNS
Superior return on capital

Our ambition is to deliver superior returns through
leveraging our low capital Partnerships division and
improving operational efficiency through greater
scale in our Housebuilding division.

RESILIENCE
Through the cycle performance

Our strategy is to maintain a position of financial
strength while growing the business and generating
superior returns, through the cycle, by focusing on
mixed-tenure delivery, particularly within Partnerships.

St. Luke’s Park, Runwell

St. Michael’s Hurst, Bishop’s Stortford

• Focus on improving gross margin

• Improved operational efficiency from

greater scale

• Capital-light model to deliver higher returns

• Dividend policy supports growth and

capital discipline

• Balanced business between Partnerships

and Housebuilding

• Mixed-tenure development, with private,

PRS and affordable homes

• Prudent balance sheet with low gearing and

land creditors

• Flexible strategic land bank based on options

• Strong pipeline of future Partnerships work

which underpins growth

22 Annual report 2019 / Countryside Properties PLC

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Our objective is to deliver
sustainable long-term value
for all our stakeholders.

We do this by creating
Places People Love.

Key performance indicators (“KPIs”)
Our KPIs align our performance and accountability to our strategy of sector-leading
growth, superior return on capital and building resilience through the economic cycle.

Quality KPIs
Three non-financial KPIs measure the quality of the Group’s performance.
These KPIs are relevant across all three strategic priorities:

• NHBC Reportable Items;

• Accident Injury Incident Rate; and

• NHBC Recommend a Friend score.

See our KPIs on pages 24 and 25

2019 highlights

Outlook

Average open sales outlets

• Only 38% of completions from

• Focus on the continued growth in sales outlets

during 2019

Net reservation rate1

0.84

ahead of our target range

private for sale

• Managed reduction in private
ASP to £367,000 driven by
geographical mix

• Continue to focus product on areas of strongest demand

• Manage sales values to maintain affordability

• Maintain net reservation rate between 0.6 and 0.8

• 9% increase in private

• Change the tenure mix as we develop the Midlands regions

completions

• Growth in new South Midlands

and Yorkshire regions

Adjusted operating margin2

16.5%

Adjusted operating profit

+11%

• Adjusted operating margin
reduced by 70bps to 16.5%
reflecting changing mix of business

• 40bps improvement in ROCE

to 37.8%

• Dividend increased to

16.3 pence per share with
policy change to 40% pay-out
of adjusted earnings

• Maintain adjusted gross margin across the Group

• Improve operational efficiency through greater scale

• Maintain capital discipline to drive further ROCE improvement

in Housebuilding

• Investment in growth while maintaining low gearing

• Growth in dividend driven by increasing earnings per share

Homes

62%

were affordable or PRS

Plots

10,492

added to our Partnerships
future work

• Operating profit delivery
balanced across our
two divisions

• Net cash position of £73.4m
at year end with adjusted
gearing (including deferred land
payments as debt) of 9.4%

• 81% of Housebuilding

land bank controlled via options
or conditional contracts

• Grow the Partnerships pipeline of future work

• Continue to focus on mixed-tenure developments

• Target a cash-positive position at year end

• Maintain our strategic-led Housebuilding land bank

• Mobilise Partnerships sites and accelerate development

where possible

1. Net reservation rate of 0.95 including bulk sales.

2. Adjusted operating margin is defined in Note 4 to the financial statements on page 112.

Countryside Properties PLC / Annual report 2019 23

Our key performance indicators

We use 11 key performance indicators to monitor our progress against
our strategic objectives of growth, returns and resilience.

Our 2019 performance
2019 has been another year of strong
performance for the Group. Our KPIs are
designed to ensure that we remain focused
on delivering growth in our output whilst
delivering superior shareholder returns
within the framework of a robust balance
sheet. We also ensure that the pace of
growth does not compromise build quality
or the safety of those working on our sites.

Transparent measures to
reward performance
We have maintained a consistent set of KPIs
at all levels of the business to ensure that all
of our people understand what drives value
for our shareholders. There is a clear link
between performance against our financial
and non-financial KPIs and remuneration
through our Group bonus scheme which
has targets including adjusted operating
profit, return on capital employed and our
NHBC Recommend a Friend score.

Further information on remuneration can be
found on pages 74 to 90.

Completions #

5,733
+33%

3
3
7
5

5
9
2
4

9
8
3
3

7
5
6
2

4
6
3
2

Adjusted revenue £m

£1,422.8m
+16%

0
7
7
7

8
5
1
6

8
2
2
4
1

5
9
2
2
1

8
8
2
0
1

The number of homes sold in the financial year,
including our share of joint ventures and associate
completions. For private homes, this is the number
of legal completions during the year. For affordable
and PRS homes, this represents the equivalent
number of units sold, based on the proportion of
work completed under a contract during the year.

Revenue consists of sales proceeds for private
homes and contractual payments for affordable
homes and PRS units as well as the proceeds
from land and commercial sales and project
management fees. Adjusted revenue includes
our share of revenue from associate
and joint ventures.

Performance
Completions increased by 33% in 2019 with sales
outlets broadly flat on the prior year reflecting the
greater proportion of PRS and affordable homes
compared with the prior year. Excluding Westleigh
growth in total completions was 25%. Our private
net reservation rate of 0.84 was above the top of
our target range (2018: 0.80).

Performance
Adjusted revenue increased by 16% to £1,422.8m
in 2019 (2018: £1,229.5m) as our completion
numbers increased during the year. Private ASP
decreased to £367,000 (2018: £402,000)
reflecting the greater proportion of sales from
our regional businesses, offset by an increase in
ASP on PRS sales.

Link to strategy
Growth in completions is key to delivering our
medium-term growth objectives.

Link to strategy
Adjusted revenue is a key measure of the growth
the business has delivered.

Return on capital employed1 %

37.8%
+40bps

4
7
3

8
7
3

6
0
3

8
6
2

7
4
2

Gearing1 %

(8.2)%
-250bps

3
5
1

)
0
2
(

Land bank # plots

49,000 plots
+13%

)
2
8
(

1
8
5
4
3

3
1
2
6
2

4
0
2
7
2

0
0
0
9
4

3
2
5
3
4

)
7
5
) (
2
1
1
(

Adjusted operating profit divided by the average
of opening and closing tangible net operating asset
value (“TNOAV”). TNOAV is calculated as TNAV
excluding net debt or cash.

Performance
Our focus on capital efficiency and growth in the
Partnerships business contributed to an increase
in asset turn to 2.3 times (2018: 2.2 times) which
was partially offset by the expected resetting of
the adjusted operating margin, resulting in ROCE
of 37.8%, ahead of our medium-term target.

Link to strategy
Return on capital employed is a key measure
of our improving returns to shareholders.

Net debt divided by net assets.

Performance
We ended the year with net cash of £73.4m up
from £45.0m in 2018. This, combined with an
increase in TNAV, resulted in gearing of (8.2)%
(2018: (5.7)%). Adjusted gearing2, which includes
deferred land payments as debt, was 9.4%
(2018: 10.4%).

The number of plots owned or controlled by the
Group on which homes can be built.

Performance
Our land bank increased by 5,477 plots during
the year as we continued to add to the
Partnerships pipeline with significant new
business wins and also strengthened our
Housebuilding pipeline.

Link to strategy
Maintaining the Group’s gearing level at the
right level means that we have a resilient balance
sheet which helps us to manage the business
through the cycle.

Link to strategy
Winning Partnerships contracts and securing land
at the right price are key to delivering our target
returns, ensuring a supply of land to fuel the
growth of our business.

1. Prior year comparatives have been restated, as described in Note 3 to the Group financial statements.

2. Adjusted measures are described on pages 146 and 147.

24 Annual report 2019 / Countryside Properties PLC

Links to strategy

Links to remuneration

GROWTH

RETURNS

RESILIENCE

Long-Term Incentive Plan

Annual incentive award

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Adjusted operating margin1 %

Adjusted operating profit1 £m

Tangible net asset value1 £m

16.5%
-70bps

8
5
1

1
6
1

8
4
1

2
7
1

5
6
1

£234.4m
+11%

£737.8m
+19%

4
4
3
2

4
1
1
2

8
7
3
7

3
2
3
6

1
0
2
6

4
7
3
5

0
9
2
3

3
5
6
1

5
2
2
1

2
1
9

Adjusted operating profit divided by
adjusted revenue.

Performance
Adjusted operating margin decreased by 70bps
principally due to the change in tenure mix
driven by the growth of our regional Partnerships
businesses outside London and a return to
target margins on Partnerships sites in the
South. This reduction was partially offset by a
higher margin in the Housebuilding division as
we continued our focus on operational efficiency.

Link to strategy
Improving operating margin helps us to deliver
increasing returns to shareholders.

Group operating profit including our share of
associate and joint ventures’ operating profit and
excluding the impact of non-underlying items.

Performance
Adjusted operating profit grew by 11% to
£234.4m (2018: £211.4m) as our investment in
new developments and a full year’s contribution
of the Westleigh acquisition contributed to a
16% increase in revenue offset by the expected
reduction in the operating margin.

Link to strategy
Sustainable growth in adjusted operating profit
helps us to achieve our growth plans and to
build a resilient balance sheet.

Net assets excluding intangible assets net
of deferred tax.

Performance
The increase in TNAV reflects retained profits. Our
growing balance sheet adds to the Group’s resilience.

Link to strategy
Growth in TNAV is a key measure of the success
of our strategy to grow the business.

NHBC Reportable Items (“RIs”)

Accident Injury Incident Rate (“AIIR”)

NHBC Recommend a Friend score %

0.21
-5%

3
2
0

2
2
0

1
2
0

2
2
0

1
2
0

227
+40%

92.5%
+790bps

7
2
8

8
4
8

6
8
8

6
4
8

5
2
9

5
0
3

5
6
2

0
2
2

7
2
2

2
6
1

Defects reported per plot at NHBC
inspections at key build stages.

The number of accidents per 100,000 people at
risk during the financial year.

Performance
The number of reportable items per inspection
was lower during the year as we continued to
focus on the quality of our build. This remains
below the industry average of 0.25.

Link to strategy
Building homes to a high standard helps minimise
customer care issues and maintain our reputation
for high quality homes. The strength of our
reputation underpins our ability to grow
the business.

Performance
We maintained the AIIR below the industry average
for the 16th consecutive year, a record of which we
are proud. Overall, our AIIR was 227 (2018: 162)
compared to the Health and Safety Executive
national average of 405. We are disappointed
that our AIIR was higher in 2019 and have recently
introduced a new accident and safety observation
reporting system to identify any trending issues
more quickly.

Link to strategy
Our focus on health and safety helps keep our
sites safe whilst operating at the pace we need
to grow the business.

The percentage of customers returning an NHBC
post-completion customer care survey who
would recommend Countryside to a friend or
family member.

Performance
During 2019 we had a real focus on our
customers’ experience across all levels of the
business. Overall, 92.5% of our customers said
they would recommend us which is a significant
improvement on our performance in 2018 and,
if maintained, will result in five-star status when
officially announced in February 2020. This is an
area we will continue to focus on going forward
with customers at the heart of our business.

Link to strategy
As a key indicator of our reputation in the market,
the NHBC Recommend a Friend score helps us
to monitor the sustainability of our growth plans.

Countryside Properties PLC / Annual report 2019 25

Operational review

PARTNERSHIPS

Our Partnerships model benefits from significant market
opportunities. It is a resilient, low risk, lower capital model
where we develop projects in partnership with local
authorities and housing associations.

Key highlights

• Strong growth from mixed-tenure delivery

• Continued opportunity of new work

• Main challenge to start developments on time

• Larger sites improve profitability over time

• Margin growth through tenure mix change

• Further growth from geographical expansion

Adjusted revenue1 £m

£837.1m
+32%

1
7
3
8

8
4
3
6

7
6
7
4

9
9
4
3

1
5
8
2

Adjusted operating profit2 £m

£127.8m
+16%

8
7
2
6 1
0
1
1

4
9
7

8
6
5

6
9
3

Financial year

Tangible net asset value3 £m

Return on capital employed4,5 %

£114.2m
+111%

2
8
1
1

6
5
0
1

2
4
1
1

9
5
4

2
4
5

78.3%
-910bps

4
7
8

3
8
7

7
6
7

1
2
7

4
9
6

Financial year

26 Annual report 2019 / Countryside Properties PLC

Strategy
Our Partnerships division develops larger
mixed-tenure communities on urban sites.
The division works with local authorities and
housing associations to deliver private for sale,
private rented and affordable homes in roughly
equal quantities to regenerate local authority
estates, town centres and other brownfield
land. We operate in and around London, the
Midlands, the North West and Yorkshire.

We utilise a lower capital, lower risk business
model, which has the benefit of priority
profits and phased viability from longer-term
development agreements. These agreements
give both flexibility and the visibility of future
profits, as well as low capital investment from
residual land payments and the pre-funding
of both the PRS and affordable homes.
The mixed-tenure model gives us fast-paced
delivery and operational efficiency, which is
supported by standard house designs and
modular panel construction.

1. Adjusted revenue includes the Group’s share of revenue

from joint ventures of £44.8m (2018: £44.5m; 2017: £57.9m;
2016: £36.7m; 2015: £16.4m).

2. Adjusted operating profit includes the Group’s share of

operating profit from joint ventures of £13.3m (2018: £9.5m;
2017: £10.7m; 2016: £7.0m; 2015: £3.1m). Divisional adjusted
operating profit excludes non-underlying items of £7.4m
(2018: £Nil; 2017: £Nil; 2016: £Nil; 2015: £Nil).

3. Tangible net asset value is calculated as net assets excluding

intangible assets net of deferred tax.

4. Adjusted operating profit divided by average TNOAV.

5. Prior year comparatives have been restated, as described

in Note 3 to the Group financial statements.

Delivering value

FOR COMMUNITIES

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Rochester Riverside
Rochester Riverside, Countryside and Hyde’s £419m
regeneration scheme in Medway, launched a Community Board
in March 2019. With a total budget of £300,000 available
for local projects, the Board ensures that the benefits of the
landmark development are felt across Rochester.

The Board, including representatives from Medway Council,
Countryside and Hyde, along with local stakeholders, helps
to bring to life worthwhile community initiatives and ideas
that will enhance the local area.

One of the key projects supported by the Rochester Riverside
Community Board this year was the Medway Neuro-Arts
Festival, which took place in July. A £5,000 grant was given
to the festival that highlighted the therapeutic benefits the
arts can provide to those living with neurological conditions.
The festival comprised an extensive programme of events,
including a range of free workshops on tai chi, yoga, mindfulness
and creative writing as well as live music performances.
The festival also hosted a premiere of Jane M Cullen’s play
“Say That Again” – based on her highly acclaimed book of
the same title – which is about an award-winning playwright
diagnosed with Parkinson’s disease.

Another project supported by the Community Board was a
photography exhibition. Schoolchildren from three different
Medway schools put their photographic talent on display
in a gallery exhibition hosted at the Rochester Riverside

Strood Academy visit to Rochester Riverside, Kent

marketing suite. The exhibition entitled “Love Where You
Live” aims to change perceptions of the local area and show
Rochester at its best. The pupils, who range in age between
ten and thirteen years old, undertook five interactive photo
walks between April and June in order to gather a variety of
images. Rochester Riverside was the primary backer of the
project that not only showcased the artistic talents of the
young people in Medway, but also promoted the beauty
of Rochester.

Rochester Riverside regularly works with the local community
and recently supported a creative workshop run by artist
Katayoun Dowlatshahi for pupils from St. Margaret’s at Troy
Town CofE Primary School. Working in groups, the pupils
built a large, triangular bug house from natural materials and
decorated the house using Cyanotype, a photographic printing
process that uses light to create a silhouette effect. The bug
house was designed to create a natural habitat for bug life
and encourage biodiversity and is now located in the garden
of the school.

Further to this Rochester Riverside supports Partners and
Communities Together (“PACT”), a number of friends
groups, as well as a variety of local community groups.
Countryside attends regular meetings, offering support to
members of the community and their projects that require
funding. In addition, Countryside is always keen to back
public health initiatives across Medway.

Community event, bug house building

Community event, Medway Neuro-Arts Festival

Countryside Properties PLC / Annual report 2019 27

Operational review continued

Strategy continued
The land is principally sourced through public
procurement or direct negotiation and we have
built up an excellent track record in winning
new work over the past 30 years, in which
time we have successfully completed over
100 developments. We have a land bank,
including preferred bidder, of over 34,000
plots, which equates to over eight years’
work at current volumes.

Market
Political support has focused on increasing the
supply of all tenures of housing, driven by the
need to increase delivery of new homes across
the country to address the structural
undersupply of housing.

This includes a sharper focus on more affordable
and PRS homes, which plays to the strengths
of our Partnerships model. Our mixed-tenure
approach allows us to build out sites more
quickly without being constrained by the rate
of private sales.

The PRS market remains strong, providing an
alternative to home ownership, and there is
demand for good quality PRS homes in most
urban areas.

The recent extension of Help to Buy to 2023
has also been welcomed, with much of our
product remaining eligible under the new
regional price caps.

Performance
Our Partnerships division continues to perform
well. During the year we have continued to
develop the newer regions established post the
acquisition of Westleigh in April 2018 and are
pleased with the outlook for those regions.
We now have a well established platform
across London and the Home Counties, the
North West, the Midlands and Yorkshire.

Thanks to our proven record in delivering
placemaking and large-scale regeneration, we
continue to be highly successful at winning new
business via public procurement and direct
negotiation with landowners. Opportunities
are increasing rapidly with bids in progress and
possible future bids representing a total of
92,562 plots, over and above those already
in our land bank. Given our strong land bank,
we are able to select those bids which are best
suited to our model where we believe we can
add the most value.

Total completions increased by 47% to 4,425
homes during the year (2018: 3,019). Excluding
the impact of a full year of the Westleigh
acquisition, underlying growth was 25%.
Private completions increased by 18% to
1,336 homes (2018: 1,137) and the Partnerships
private average selling price (“ASP”) decreased
by 11% to £283,000 (2018: £318,000). This was
largely driven by the impact of the growth of
the division outside London and the impact
of a full year of the Westleigh acquisition,
offset by house price inflation of around 2%.

The main drivers of growth in 2019 came from
the uplift in our affordable and PRS homes
provision. In total, we delivered 1,760 affordable
homes (2018: 1,073), an increase of 64% on 2018.
We delivered 1,329 PRS homes (2018: 809),
the majority of which were via our partnership
with Sigma Capital. This relationship continues
to be very strong, having now delivered more
than 3,000 homes with Sigma Capital to date.

During the year, our Southern region around
London performed well growing by 81 homes
to 983 homes (2018: 902 homes). This included
significant mixed-tenure delivery at Trinity Place
Becontree (126 homes) and Elements, Enfield
(113 homes). We also delivered a further 109
homes and the community centre at Acton
Gardens in West London.

Our North West region continued its strong
growth focused on Manchester and Merseyside,
delivering 1,608 homes from 38 developments,
an increase of 15% on 2018. The region delivers
predominantly low rise family housing and
provides a large proportion of the Group’s PRS
output with 880 homes delivered in the year
(2018: 656 homes).

Our Midlands regions benefited from a full year’s
contribution from Westleigh and continued
growth in our established West Midlands region.
Overall, we delivered 1,834 homes from 57
developments in these regions, up 154% from
723 homes in the prior year. Production in
our newly created South Yorkshire region has
commenced with 49 equivalent affordable
homes delivered in 2019 and a good pipeline
of future work emerging. We have a strong
platform from which to further accelerate
growth in these regions with supply chains
to support it.

In March 2019, we opened the Group’s
modular panel factory at a site in Warrington
from which we delivered 376 homes in 2019.
The factory is now operating two separate
shifts and we estimate will deliver c.1,400 homes
in the forthcoming financial year. We are
already seeing the benefits of this investment
with a reduction in our reliance on labour on
site, increased supply chain capacity, reduced
waste and improved quality.

28 Annual report 2019 / Countryside Properties PLC

Abbotsfield, St. Helens

We had another very strong year for new
business, with 40 successful bids contributing
an additional 10,492 new plots our future
work, including 2,472 plots for our Midlands
regions and 2,393 plots for our South Yorkshire
region, which will help shift the tenure mix to
increase the proportion of private homes of
the division as these sites start to contribute.
We started on 56 new developments during
the year and had 28 open sales outlets as at
30 September 2019 (2018: 33), with a further
70 (2018: 41) sites under construction.

Outlook
With continued demand and Government
support for increased housing delivery of all
tenures, Partnerships is well placed to continue
its medium-term sector-leading growth. With
regional expansion giving us greater scope for
winning new work, we see no slowdown in
the number of opportunities to grow the
business further.

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Owned

Controlled/option

Preferred bidder

Bids in progress

Future bids

Over eight years of pipeline

5 0 %

29%

plots

34,842

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92,562

plots

Future opportunities continue to grow

The public procurement process means that
major schemes often take up to four years to
fully mobilise, particularly when regenerating
existing housing estates. We see continued
lower growth in London from new and existing
developments, with greater expansion in the
regional cities from newly secured work.

We will look to selectively add new sites to
our already considerable land bank and have
a bid pipeline of around a further 90,000 plots,
from which we aim to secure at least twice the
number of plots being developed during the year.

Open outlet sites

Other active sites

Countryside Properties PLC / Annual report 2019 29

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Operational review continued

HOUSEBUILDING

Our Housebuilding division made good progress driving
operational efficiency, with a 110bps growth in margin
and 10bps improvement in ROCE.

Key highlights

• Industry-leading strategic led land bank

• Only 19% of land owned equivalent to 3.5 years’ supply

• Housebuilding now achieving operational scale

• Increased use of standard house types supporting margins

• Management of average selling prices to ensure they

remain afordable

Adjusted revenue1 £m

£585.7m
-2%

7
4
9
5

7
5
8
5

1
2
5
5

1
7
2
4

7
0
3
3

Adjusted operating profit2 £m

£114.8m
+5%

8
4
1
1

6
9
0
1

5
1
9

1
8
6

6
1
5

18
17
Financial year

18
16
17
Financial year

Tangible net asset value3 £m

Return on capital employed4 %

£623.6m
+10%

6
3
2
6

9
5
6
5

1
4
1
5

8
1
3
4

1
3
8
2

25.1%
+10bps

0
5
2

1
5
2

9
0
2

0
8
1

6
6
1

Strategy
Our Housebuilding model is based on an
industry-leading strategic land bank, located in
economically resilient markets around London
and the Home Counties. The division uses this
land to develop larger-scale sites creating a strong
sense of place and providing both private and
affordable housing. The Housebuilding division
is growing to scale to maximise the benefits of
operational efficiency and procurement benefits.

We have 39 active sites supported by four
development regions around London, together
with a dedicated strategic land team. Around
81% of our land is sourced strategically,
assembling land holdings under purchase
options to promote planning strategies. This
allows us to secure the long-term supply of
land in a capital-efficient way, typically at a
discount to the prevailing open market value.
We have been developing land in this way for
over 50 years and have built up a land bank
of around 24,000 plots of which 81% are held
on options or controlled rather than owned.
This gives us excellent visibility of future work,
flexibility on draw down of land and an
efficient balance sheet.

1. Adjusted revenue includes the Group’s share of revenue

from joint ventures and associate of £140.9m (2018: £166.4m;
2017: £125.1m; 2016: £69.0m; 2015: £51.9m).

2. Adjusted operating profit includes the Group’s share of

operating profit from joint ventures and associate of £33.5m
(2018: £36.9m; 2017: £22.9m; 2016: £18.3m; 2015: £13.6m).

3. Tangible net asset value is calculated as net assets excluding

intangible assets net of deferred tax.

Financial year

4. Adjusted operating profit divided by average TNOAV.

30 Annual report 2019 / Countryside Properties PLC

The Saliendra family

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Listen to the Saliendra
family tell their story.

https://qrs.ly/oyay6g7

FOR CUSTOMERS

The Saliendra family move to Trinity Place
with Help to Buy London
Following a move to London from the Philippines 15 years ago
Ian Saliendra, 44, and wife Maria, 44, were looking for the perfect
new build home. They wanted to be within the area they had been
renting and were looking for a home that was finished to a high
standard that meant they could move in straight away without the
hassle of decorating. The family finally settled on our Trinity Place
development, in Becontree, London.

Ian comments: “We really wanted our own place, our own
home, because this is something that we see as an investment…
something we can pass on to our kids as they grow up.”

Ian continues: “Help to Buy was very important for us in buying our
first home because with a family like us, having three kids, it is very
difficult for us to save some money to make our first step... it made
our dream come true.”

The family were reassured by the ease of the process, and the
service provided to them by Countryside. They felt supported
and guided throughout the whole process.

Ian added: “Countryside, in terms of customer experience, is
absolutely fabulous. They make you feel that you are part of the
family; they make you feel that they are there to support you.”

Ian and Maria were impressed by the design of the house, finding
the rooms more spacious than initially expected. Falling in love with
Trinity Place, the couple were delighted they qualified for the Help to
Buy London scheme as it allowed them to make the very important
step to becoming homeowners.

Countryside Properties PLC / Annual report 2019 31

Ian and Maria Saliendra

Countryside, in terms
of customer experience
is absolutely fabulous.
They make you feel that you
are part of the family; they
make you feel that they are
there to support you.”

Operational review continued

Market
The continuing structural shortage in housing
again underpinned another positive year for the
housebuilding sector, particularly at the lower
price points. First-time buyers continue to
represent the area of highest demand, supported
by initiatives like the Government’s Help to Buy
scheme, which featured in 52% of the year’s
private completions for the Group.

As in recent years, our primary focus is
on ensuring that our house prices remain
affordable for owner occupiers local to
our resilient mix of sites across high quality
locations. With the new regional price caps
coming into the Help to Buy scheme, for
first-time buyers to 2023, we have worked this
year to plan our future sites to ensure that
product meets the areas of highest demand.

There has been some softening in house prices
in the South East during 2019 and in our
Housebuilding division house prices deflated
by 3% based on completions.

Performance
Our Housebuilding business is now of scale
and 2019 was another good year for the
division. As a result of a focus on capital
discipline and operational efficiency it delivered
another year of operating margin growth
despite the diminishing tailwind from house
price inflation.

We continue to look to increase the use of our
standard house type range which has simplified
the building process on site to improve efficiency
and quality. We continue to manage average
selling prices to ensure our homes remain
accessible to our core target market of owner

Aura, Cambridge

occupiers and first-time buyers with no
negative impact on quality and placemaking.

The division delivered 3% growth in completions
to 1,308 homes in 2019 (2018: 1,276 homes)
with private completions down 2% and affordable
completions flat in the year. We also delivered
48 PRS homes for Sigma Capital in the year on
our site at Newhall in Harlow and will look to
continue to deliver PRS units on sites where
the land economics allow it.

Our private ASP was down by 2% to £500,000
(2018: £512,000) which is in line with our
target range, with no reduction in build quality
or strength of location.

Demand remains strong for our homes where
we are creating high quality communities in
resilient locations at attractive price points for
local owner occupiers. This is evidenced at
Beaulieu, Essex (97 homes); St Luke’s Park,
Essex (70 homes); Greenwich Millennium Village,
London (55 homes) and Springhead, Kent
(55 homes).

We completed eight residential land sales
in the year, including one at our new site at
Rayleigh, Essex; two at Beaulieu, Essex; two at
Bury St Edmunds, Suffolk and one at Bicester,
Oxfordshire. We also made one commercial
sale at Bicester and completed Abcam plc’s
head office at our Medipark joint venture
in Cambridge.

We spent £112m on land during the year,
adding 18 sites to our land bank, which at
30 September 2019 totalled 24,303 (2018:
19,778). We own 4,644 plots within the land
bank, which at current volumes is equivalent to
3.5 years of forward work.

St. Michael’s Hurst, Bishop’s Stortford

32 Annual report 2019 / Countryside Properties PLC

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Strategically sourced

Market value

Owned land

Controlled

Conditional contract

81%

plots

Industry-leading strategic land bank

Balance sheet efficiency driven from
options and conditional contracts

24,303

19+
19+

40,560
24,303

Total plots
plots

1
1
%

Outlook
We continue to see strong demand for both
private for sale and affordable homes within
our areas of operation. While house price
inflation has moderated and build costs have
continued to rise, underlying margin will be
supported from both operational efficiency
and greater scale. We continue to focus our
homes on local owner occupiers, with an
emphasis on first-time buyers, while creating
placemaking communities to accelerate sales
rates and values. With five-star customer
satisfaction we expect to maintain a strong
following for both the Countryside and
Millgate brands.

We anticipate continued Government support
for housing of all tenures, but do expect the
reduction and ultimate removal of Help to Buy
in 2023. However, with full employment and
good mortgage availability we expect to
mitigate this change. We do also see further
legislation on fire safety and leasehold reform
and will ensure that we remain at the forefront
of industry practice to maintain our reputation.

Open outlet sites

Other active sites

Countryside Properties PLC / Annual report 2019 33

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Group Chief Financial Officer’s review

SECTOR-LEADING
EARNINGS AND
COMPLETION
GROWTH

Another year of good completions and
earnings growth in both divisions.

We have continued our growth trajectory
with both divisions now operating at scale
and delivering solid growth in earnings this year.
With a strong forward order book, low gearing
and good operational execution, the Group is
well positioned to continue to execute its strategy.

Group performance
Total completions were up 33% in 2019 to 5,733
homes (2018: 4,295 homes) as we delivered
growth across all tenures, with particularly
strong growth in affordable and PRS homes.
Our private average selling price (“ASP”)
reduced by 9% to £367,000 (2018: £402,000)
as a result of the shift in geographical mix
towards the regions outside London following
the acquisition of Westleigh in 2018 and our
focus on price points appropriate to local
owner occupiers. Affordable ASP decreased
by 4% to £153,000 (2018: £159,000) again
reflecting an increase in the proportion of
homes delivered from our regional businesses.
As a result of the increase in completions,
Group adjusted revenue was up 16% year
on year to £1,422.8m (2018: £1,229.5m). The
legacy Westleigh business in the East Midlands
contributed 1,225 homes and £163.1m of
revenue in the year (2018: 465 homes;
£63.5m revenue).

Reported revenue increased by 21% to
£1,237.1m (2018: £1,018.6m). The difference
between adjusted and reported revenue is the
effect of the proportionate consolidation of
the results of the Group’s joint ventures and
associate in the adjusted measure. Revenue at
our homebuilding joint ventures was broadly
consistent year on year with a reduction in
revenue at our Medipark joint venture in
Cambridge as it completed the development
of Abcam plc’s new head office in early 2019.

34 Annual report 2019 / Countryside Properties PLC

Group adjusted gross margin (including the
Group’s share of joint ventures and associate
gross profit) reduced by 80bps to 21.7%
(2018: 22.5%). This margin decrease was
principally due to the change in tenure mix
driven by the growth of our regional Partnerships
businesses outside London and a return to
target margins on Partnerships sites in the South.

Profit from land sales contributed £14.2m
(2018: £11.0m) as we tactically sold parcels of
Housebuilding land where we no longer expect
to build with a further £4.4m profit (2018: £6.1m)
from commercial sales principally generated
from retail units at our associate in Bicester.
An additional £0.9m was recognised in respect
of overage receivable (2018: £4.1m).

Adjusted operating profit increased 11% to
£234.4m (2018: £211.4m) largely as a result
of volume growth. The Group’s adjusted
operating margin reduced by 70bps to 16.5%
(2018: 17.2%) primarily as a result of lower
gross margins described above, offset by a
focus on operating costs.

Reported operating profit increased 14% to
£170.4m (2018: £149.3m) with the difference to
adjusted operating profit being the proportionate
consolidation of the Group’s joint ventures and
associate and non-underlying items. Further
details of the difference can be found in Note 4
to the financial statements.

Our net reservation rate per open sales outlet
was 0.84 (2018: 0.80) reflecting continued
strong demand for our homes. During the year,
bulk sales of 212 units were made to local
authorities and Sigma Capital which, if included,
would have increased the net reservation rate
to 0.95 (2018: 0.80). The average number of
open sales outlets was up 6% on the prior
year at 56 (2018: 53). A further 79 sites
(2018: 55 sites) were under construction but

not yet open for sale as at 30 September 2019,
sustaining the production growth underpinning
our medium-term targets. This included 36
sites that will deliver only PRS and affordable
homes. Our total forward order book,
including private for sale reservations,
affordable and PRS homes under contract,
increased 30% to £1,166.1m compared to
£899.7m last year, as a result of growth in all
three tenures. Our private forward order book
has grown 12% to £241.4m (2018: £215.1m).

We continued to see strong demand for our
homes in the North West and the Midlands
where prices increased by around 6%. The
market in the South East and outer London
boroughs has been more challenging with
prices 3% lower on average. Cost price
inflation remained at around 4% and we
managed to offset the impact of cost inflation
through operational efficiencies and through
better sub-contractor availability which allowed
us to place certain contracts for longer
durations. In the North West and Midlands,
cost pressure remained due to strong regional
demand, but this was more than offset by
house price inflation in the year.

We ended the year with net cash of £73.4m
(2018: £45.0m), slightly lower than planned due
to increased investment in the Midlands regions
and the timing of land sale receipts at year end.
Reported net finance costs remained in line
with last year at £10.9m (2018: £10.6m), of
which £3.4m represented cash interest on the
Group’s borrowing facility (2018: £3.3m).

Partnerships
Our Partnerships division grew strongly in
2019 driven by the full-year impact of the
Westleigh acquisition in 2018 and a focus
on growing the regional businesses outside
the South East. In total, 4,425 homes were
delivered by the Partnerships division in the
year, an increase of 47% (2018: 3,019 homes),
of which Westleigh delivered 1,225 homes
(2018: 465 homes). Excluding these,
completions grew by 25%.

The ability of mixed-tenure to accelerate
delivery was demonstrated at Broughton,
Salford (130 homes), Trinity Place, Becontree
(126 homes) and Bilston Urban Village,
Wolverhampton (121 homes), where PRS and
affordable homes allowed us to deliver more
completions than a traditional housebuilding site.

Completions of private housing increased by
18% to 1,336 homes (2018: 1,137 homes)
driven by delivery at Wilson Chase, Huyton
(93 homes); Trinity Place, Becontree (81 homes)
and Elements, Enfield (96 homes). Delivery
of affordable homes increased 64% to 1,760
homes (2018: 1,073 homes), and PRS homes
increased 64% to 1,329 homes (2018: 809
homes), as our relationship with Sigma Capital
continues to thrive.

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Private average selling price decreased 11%
to £283,000 (2018: £318,000), reflecting the
change in mix of the business towards the
North and Midlands, which typically deliver
lower priced homes. Adjusted revenue
increased by 32% to £837.1m (2018: £634.8m)
with reported revenue, which excludes the
Group’s share of revenue from joint ventures,
up 34% to £792.3m (2018: £590.3m).

Whilst the growth in delivery came from
all tenures, private housing made up 30% of
the divisional completions (2018: 38%), with
affordable completions being 40% of the total
and PRS the remaining 30% (2018: affordable
35%; PRS 27%). This change in the tenure mix,
combined with the expansion into regional
geographies and the completion of two high
margin developments in London in 2018,
meant that adjusted gross margin for the
Partnerships division decreased 220bps to
19.6% (2018: 21.8%) as expected.

Adjusted operating margin reduced to 15.3%
(2018: 17.4%) which is in line with our target
level. As a result of the increased volume,
adjusted operating profit was up 16% to
£127.8m (2018: £110.6m) and reported
Partnerships operating profit increased to
£107.1m (2018: £101.1m).

We have had another very successful year
in winning new business in the Partnerships
division, particularly in our new regions in the
Midlands and Yorkshire. In addition to those
sites already in the land bank, including those
with preferred bidder status, we secured
10,492 new plots in the period. We now have
34,842 Partnerships plots under our control
(2018: 29,878 plots). This represents
approximately eight years’ supply at current
volumes and provides significant visibility.

Housebuilding
Our Housebuilding division delivered a 3%
increase in completions to 1,308 homes
(2018: 1,276 homes). Total adjusted revenue
from Housebuilding was down 2% to £585.7m
(2018: £594.7m) as a result of site mix during
the year and the challenging market at higher
price points. Excluding the results of joint
ventures and associate, on a reported basis
Housebuilding revenue increased 4% to
£444.8m (2018: £428.3m), with higher completion
volumes offset by a reduction in ASP.

Private completions decreased by 2% to 841
homes (2018: 858 homes). Open sales outlets
at the year end increased to 30 (2018: 27)
and we were active on an additional nine sites

at 30 September 2019 (2018: 14). Private ASP
decreased 2% to £500,000 (2018: £512,000)
which is in line with our targeting of local
owner occupiers and reflects the softening of
prices at higher price points in the South East.

Affordable adjusted revenue increased by 2%
to £79.9m (2018: £78.1m) with completions in
line with last year at 419 (2018: 418) at an ASP
of £191,000 (2018: £187,000), up 2% on 2018.

During the year we completed our first PRS
sales in Housebuilding, with 48 PRS units being
delivered in Harlow, Essex, for Sigma Capital,
generating £15.4m of revenue (2018: £Nil).

A further £50.0m of adjusted revenue came
from land and commercial sales (2018: £65.9m),
generating £16.9m of profit (2018: £16.6m)
as we sold surplus land at Rayleigh, Essex,
and Bury St. Edmunds, Suffolk, as well as
completing a commercial sale of retail units in
our associate at Bicester. The gross margin on
these sales of 33.8% was higher than in 2018
due to the nature of the land sold in the year.

Housebuilding adjusted gross margin increased
by 140bps to 24.7% (2018: 23.3%), as a
number of profitable legacy sites sold through
and we saw the benefit of site-level operational
efficiencies being realised.

Countryside Properties PLC / Annual report 2019 35

Group Chief Financial Officer’s review continued

Housebuilding continued
Adjusted operating margin improved by 120bps to 19.6% (2018: 18.4%)
as the benefit of improved gross margins were realised. Overall, the
Housebuilding adjusted operating profit increased by 5% to £114.8m
(2018: £109.6m), whilst reported Housebuilding operating profit, excluding
the results of the associate and joint venture, increased by 12% to £81.3m
(2018: £72.7m).

In line with our strategy, we have maintained the land bank in our
Housebuilding division and have acquired 6,975 plots on 18 sites during
the period. The Housebuilding land bank now stands at 24,303 plots
(2018: 19,778 plots), of which 80% has been strategically sourced.

Finalisation of Westleigh acquisition accounting
The prior year Group financial statements presented provisional
accounting for the acquisition of Westleigh, based on the assessment
of fair values at 30 September 2018. The Directors’ assessment of the
fair values of Westleigh’s assets and liabilities has now concluded. As a
result, goodwill relating to Westleigh has increased by £10.0m to £72.0m,
primarily due to the fair value of inventories being reduced by £8.9m.
As required by IFRS 3 “Business Combinations”, this change has been
reflected in the comparative presentation of the consolidated statement
of financial position as at 30 September 2018, with no change to
reported results or cash flows.

Taxation
The income tax charge was £35.2m (2018: £32.1m), with an adjusted
tax rate of 18.5% (2018: 19.0%) and, on a reported basis, an effective
tax rate of 17.3% (2018: 17.8%), the main difference between the
rates reflecting the treatment of joint ventures and associate and
non-underlying items.

The adjusted tax rate reconciles to the reported rate as follows:

Adjusted tax rate

Year ended 30 September 2019

Adjusted profit before tax and tax
thereon

Adjustments and tax thereon, for:

Profit
£m

Tax
£m

Rate
%

223.5

41.3

18.5

Non-underlying items

(17.2)

(3.4)

Taxation on associate and joint
ventures in profit before tax

(2.7)

Profit before tax and tax thereon

203.6

(2.7)

35.2

—

17.3

In 2020, Countryside expects the adjusted tax rate to continue to be
slightly lower than the UK statutory corporation tax.

Earnings per share
Adjusted basic earnings per share increased by 13% to 40.8 pence
(2018: 36.0 pence) reflecting the increase in adjusted operating profit
during the year. The weighted average number of shares in issue was
445.1m (2018: 447.5m).

Basic earnings per share was 37.7 pence (2018: 33.1 pence). Basic earnings
per share is lower than adjusted basic earnings per share due to the
effect of non-underlying items that are excluded from adjusted results.

Dividend
Given the continued strong cash generation in the business, the Board
has increased the recommended dividend pay-out to represent 40% of
adjusted earnings. Accordingly, a final dividend of 10.3 pence per share
(2018: 6.6 pence per share) has been recommended, taking the total
dividend for 2019 to 16.3 pence per share (2018: 10.8 pence per share).

The proposed final dividend was recommended by the Board on
20 November 2019 and has not been included as a liability as at
30 September 2019.

In 2020, Countryside intends that the dividend will continue to represent
40% of adjusted earnings per share.

Non-underlying items
In the first half of the year, a non-cash charge of £7.4m was recognised to
impair the value of inventories 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.
Management took a number of steps to rectify this and to ensure
the issue was contained in this region, including the appointment of
Deloitte LLP to perform a full investigation. Disciplinary action was
taken against the members of staff involved, none of whom remain
employed by the Group.

Following the acquisition of Westleigh in 2018, further integration costs
of £1.8m were incurred during the year. The integration of Westleigh is
now complete with new regions in Leicester, Solihull and Leeds now fully
operational and re-branded as Countryside. As part of the agreement to
purchase Westleigh, deferred consideration is payable to management
who remained with the Group post acquisition. £18.1m is expected to
be paid in 2020.

The amortisation of acquisition-related intangible assets is reported
within non-underlying items as management does not believe this cost
should be included when considering the underlying performance of the
Group. The increased cost in 2019 reflects a full year of amortisation
related to Westleigh.

A total tax credit of £3.4m (2018: £2.4m) in relation to all of the above
non-underlying items was included within taxation in the statement of
comprehensive income.

Non-underlying items

Year ended 30 September

Recorded within operating profit:

Amortisation of intangible assets recognised
in acquisitions

Acquisition and integration costs relating to
Westleigh acquisition

Deferred consideration relating to Westleigh
acquisition

Impairment of inventories

Total non-underlying items

2019
£m

10.2

1.8

(2.2)

7.4

17.2

2018
£m

5.6

2.7

7.4

—

15.7

Net finance costs
The Group has a £300m revolving credit facility expiring in May 2023.

In 2019, net finance costs were £10.9m (2018: £10.6m), of which
net cash costs were £2.8m (2018: £3.2m). Interest on the Group’s bank
loans and overdrafts remained broadly in line with last year at £3.4m
(2018: £3.3m).

36 Annual report 2019 / Countryside Properties PLC

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Statement of financial position
As at 30 September 2019, Group TNAV was £737.8m (2018: £620.1m),
an increase of £117.7m. As we continued to grow the business, inventory
grew by £67.8m to £808.6m (2018: £740.8m) as we were active on
137 sites at 30 September 2019 (2018: 115 sites). Investments in joint
ventures and associate were maintained broadly in line with last year at
£65.7m (2018: £67.9m).

The Group continued to be cash generative, with £86.9m generated
from operations (2018: £111.4m) after investing a net £103.3m in
working capital during the year. This investment related to the growth
of our new Yorkshire and Midlands regions, together with significant
infrastructure investment on other large Partnerships developments
such as Beam Park, Dagenham, and Houghton Regis, Bedfordshire, and
the acquisition of a strategic Housebuilding site in Rayleigh, Essex.

ROCE increased to 37.8% (2018: 37.4%) as our business model continued
to deliver strong returns from mixed-tenure delivery, driven by the
increased proportion of Partnerships’ contribution to the Group’s result.
Partnerships divisional ROCE of 78.3% (2018: 87.4%) remained ahead of
our medium-term target with a small improvement in asset turn to 5.1 times
(2018: 5.0 times) offset by the reduction in margin discussed above.
Housebuilding divisional ROCE remained flat at 25.1% (2018: 25.0%)
with a continued focus on operational and capital discipline.

Return on capital employed

Year ended 30 September

Adjusted operating profit (£m)

Average capital employed (£m)1

Return on capital employed (%)

Increase

2018
restated

211.4

565.0

37.4

2019

234.4

619.8

37.8

40bps

1. Capital employed is defined as tangible net operating asset value, or TNAV excluding net cash.

Cash flow

Summary cash flow statement

Year ended 30 September

Profit before taxation

Non-cash items

Increase in inventories

Increase in receivables

Increase in payables

(Decrease)/increase in provisions

Cash generated from operations

Interest and tax paid

Dividends paid

Acquisition of subsidiary

Purchase of own shares

Decrease in loans to associate and joint ventures

Dividends received from associate
and joint ventures

Repayment of members’ interest

Proceeds of borrowings

Other net cash (outflows)/inflows

2019
£m

203.6

(13.4)

(67.8)

(66.7)

34.1

(2.9)

86.9

(31.7)

(56.0)

2018
£m

180.7

(17.6)

(59.3)

(26.8)

31.7

2.7

111.4

(25.9)

(41.1)

—

(111.1)

(13.0)

6.8

43.1

2.9

—

(10.6)

(11.4)

11.5

26.9

12.1

2.5

(5.1)

Net increase/(decrease) in cash and
cash equivalents

28.4

(30.2)

The increase in dividends paid reflects both the increase in adjusted
profit after tax and the enhancement in the pay-out ratio to 40% of
adjusted earnings at the half year in May 2019.

During the year, the Group’s Employee Benefit Trust (“EBT”) purchased
4,500,000 shares at a total cost of £13.0m (2018: 3,219,634 shares;
£11.4m) to enable it to satisfy future vesting under the Group’s various
share plans. The EBT acquired a further 1,000,000 shares using proceeds
from Save As You Earn (“SAYE”) schemes.

Overall, net cash increased by £28.4m to £73.4m (2018: £45.0m).

Impact of the new accounting standards
IFRS 15 “Revenue from Contracts with Customers” was effective for
the year ended 30 September 2019. The only impacts of adopting this
standard are that proceeds from the sale of part exchanged properties
are presented as revenue as opposed to being offset within cost of sales
and where there are residual obligations in land sale contracts that are
not satisfied at the balance sheet date, an element of the transaction
price will be deferred into future periods.

During the year ended 30 September 2019, £9.1m of revenue was
recognised on the sale of part exchange properties. The impact on
adjusted revenue (including share of revenue from joint ventures and
associate) was £10.3m.

£3.0m of adjusted revenue and £0.6m of related profit was deferred
relating to residual obligations in land sale contracts that were not
satisfied at the balance sheet date (£0.7m of reported revenue and
£0.2m of related profit). This is expected to be realised during the year
ended 30 September 2020.

There was no impact to the Group on transition to IFRS 9 “Financial
Instruments”.

IFRS 16 “Leases” is effective for the Group from the 2020 financial year
commencing on 1 October 2019. We have completed our review of the
impact of this standard and do not believe there will be a material impact
on profit or net assets, although new offsetting right of use assets and
lease liabilities will be recognised of around £35m. Further information
on the impact of the change is described in Note 3 to the Group
financial statements.

Mike Scott
Group Chief Financial Officer
20 November 2019

Countryside Properties PLC / Annual report 2019 37

Our people

OUR PEOPLE MAKE
THE DIFFERENCE
EVERY DAY

Our people strategy is very simple:
to enable the Group’s growth through
recruiting, developing and retaining talent.

Without that talent we would not be able to
build sustainable communities where people
love to live. This year we have continued to
grow organically and our current headcount
stands at approximately 1,800.

People remain a
key differentiator
Countryside continues to attract and retain
the best people in the housebuilding sector to
deliver our strategy. We believe that our people
truly differentiate us from our competition.
In the last five years, we have more than
trebled our employee numbers and now have
approximately 1,800 people working for us.
Our aim is to “grow our own” as much as we
can, together with a healthy balance of new
recruits. A third of our new recruits join us
through our employee referral scheme.

Significant investment in
developing our people
We have maintained and developed our
Group-wide approach to succession and talent
management as part of our “grow our own”
people strategy. This year we have delivered four
levels of leadership development programmes.
These programmes are embedding leadership
best practices and new thinking at all levels. At
our most senior levels we have a well-established
coaching programme for a targeted cross-section
of our senior population, using a combination
of internal and external coaches, tailored to
the individual’s needs. The second cohort of
new directors completed a ten-month senior
leadership development programme, and
we are currently planning our third
cohort’s programme.

Our focus on quality of training delivery
remains, particularly around induction, sales
development and externally accredited

38 Annual report 2019 / Countryside Properties PLC

Elements, Enfield

leadership programmes. All programmes are
designed to complement each other and provide
consistent messaging and focus. We continue
to develop our people at all levels of the
organisation through leadership, professional
and vocational qualifications and e-learning.

Each region has a training matrix to assess and
monitor people development requirements.
During 2019 we ran a total of 160 training
courses. Developing our people to facilitate
growth and building a pipeline of talent are
critical to our success.

Future talent continues
to be a priority
Our two-year graduate programme was
recognised as the best across the housebuilding
sector and ranked 32nd overall (2018: 43rd) in
the top 100 graduate employers by graduate
recruitment website The Job Crowd. The
programme is proving very successful and we
continue to attract large numbers of high calibre
graduate candidates. We currently have 27
graduates on our programme, with another
large new intake this year.

We also have 94 apprentices throughout the
Group. This is nearly double the number of
apprentice programmes compared to last year
and remains a key focus as we look to tackle
the skills shortage in the industry.

We are investing in early career programmes
by increasing work experience, intern, graduate
and trainee opportunities both on site and in
our regional offices. This enables us to grow
our own talent and build employee loyalty and
employee engagement.

Our people are our shareholders
In May 2019, we launched our fourth
all-employee Save as You Earn (“SAYE”) plan.
This plan, together with the three we have
launched since IPO, means that around 48%
of our eligible employees are currently signed
up to buy shares in Countryside.

December 2018 also saw the fourth grant
of our Long-Term Incentive Plan to our most
senior group as a retention tool for this key
population. We believe we continue to offer a
highly market-competitive reward package.

Inclusion and diversity
At Countryside, we are committed to
increasing diversity by providing an inclusive
working environment where everyone feels
valued and respected.

In 2019 our gender statistics showed a female:
male ratio of 30:70 (2018: 28:72). At management
level we have a female:male ratio of 17:83 which
represents an increase in the proportion of
women compared with 2018. Gender equality
remains an issue for our sector as a whole and
we recognise that we must play our part in
making the industry a more attractive career
choice for women.

Earlier this year we reported our mean gender
pay gap of 28%, down from 33% in the previous
year. Our gender pay gap is driven by there being
more men at the higher end of the pay scale.

Our gender pay gap report can be viewed at
www.countrysideproperties.com/sustainability/
governance.

Ratio of female:male employees
At 30 September 2019

Total employees

550; 30%

1,273; 70%

Senior management

81; 17%

406; 83%

Board

2; 29%

5; 71%

Female

Male

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Victoria Beeston

FOR OUR PEOPLE

Victoria Beeston – apprentice case study
Victoria joined Countryside in January 2017 after applying
for a trainee management course. Starting her journey on
the two-year apprenticeship scheme, the opportunity was
perfect for Victoria as she could learn on the job and study
at the same time.

Victoria comments: “Apprenticeships are not just for
younger people leaving school or college, but for all ages.
There is such a variety of different jobs in construction
and so many opportunities for men and women. People
still think that the housebuilding industry is male dominated
but in over two years working here at Countryside, I’ve seen
more and more women enter the sector.”

Whilst working at Countryside, Victoria has undertaken
the BTEC Level 4 HNC Diploma in Construction and the
Built Environment as well as NVQ Level 4 in Construction
Management. After successfully completing the scheme,
Victoria immediately took up the position of Assistant
Site Manager.

Victoria concludes: “Working in construction is very satisfying.
When you’ve finished on a site, you can look back at the
development and know that you helped to create it. Helping
to build a project and leaving a legacy is a great feeling.”

In over two years working here at
Countryside, I’ve seen more and
more women enter the sector.”

Countryside Properties PLC / Annual report 2019 39

Our people continued

Armed Forces Covenant Signing;
Royal Engineers Museum, Chatham

We want our people to choose
the right benefits for them and
their families
Our approach to reward is centred on choice.
Our benefits range from buying and/or selling
up to five days of annual leave, through to
reduced fees on life, dental and travel insurance,
to discounted medical and cancer screenings.
During our 2019 flexible benefits annual
enrolment window, 55% of employees selected
a new benefit or amended an existing one. For
those employees who qualify for a company
car or cash allowance, we offer a sector-leading
fleet proposition. This again focuses on offering
our employees choice based on their lifestyle,
while remaining environmentally conscious by
starting to offer hybrid vehicles. We offer
sector-leading maternity, paternity and
adoption benefits.

Health and safety
Countryside conducts its business with due
regard for the health, safety and welfare of its
employees, contractors, clients, visitors and
members of the public. We develop a positive
culture towards health and safety throughout
our operations and as a minimum we observe
all the requirements of the Health and Safety
at Work etc. Act 1974 at all times.

Countryside operates a comprehensive health
and safety management system (fully accredited
to ISO 45001:2018) and we are committed to
continual improvement through a comprehensive
training programme and by actively encouraging
feedback from all levels of our workforce.
Regular on-site inspections are carried out
internally by the Group’s qualified health and
safety professionals. The day-to-day management
of these activities is overseen by the Group’s
Head of Health and Safety.

For more details of the Group’s AIIR see
page 44.

40 Annual report 2019 / Countryside Properties PLC

Armed Forces Covenant Signing with Ian Sutcliffe
and Colonel Matt Quare MBE ADC, Corps Colonel Royal Engineers

The Company Secretary is the Executive
Committee member responsible for health
and safety throughout the Group.

Armed Forces pledge
Countryside signed the Armed Forces Covenant
with the Royal Engineers at Brompton Barracks,
home of The Royal School of Military Engineering
(RSME), Chatham, demonstrating our support
for the armed forces (AF) community.

As part of this commitment, we aim to double
the number of Countryside employees with
military connections within the next five years.
We will work to open avenues of employment
from the AF to our company; initially, focusing
on recruitment in three key business areas
- Construction, Health & Safety, and Materials
& Logistics. In addition, we will be facilitating
site visits for RSME students as part of their
training programmes, as well as sponsoring the
Royal Engineers Association Football Club and
the annual Royal Engineers Excellence Awards.

Following the signing on Armistice Day, we are
now recognised with the Bronze award in the

Defence Employer Recognition Scheme, which
encourages employers to support the armed
forces community and inspire others to do
the same.

Focus on employee wellbeing
We now have 33 mental health first aiders
across the Group and by the end of 2020 we
expect to have 150 trained first aiders.
Employee engagement groups have been set
up in each region to ensure our employees
have a voice.

Our offices are great places
to work
As part of our growth journey, we have delivered
on our plans for an extensive overhaul and
upgrade of our office space; following on
from our new offices last year in London
and Cheshunt, we opened brand new offices
in Warrington, Leeds, Solihull and Leicester.
Next year, we have plans for new office space
in Ealing and Wolverhampton and a significant
refit of our head office in Brentwood, Essex.

Sustainability report

CREATING PLACES
PEOPLE LOVE

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We are committed to managing our business in the right way, ensuring
all our operations are carried out in an ethical, safe, environmentally
responsible and sustainable manner which we believe is fundamental
to creating Places People Love.

Our sustainability strategy
The way we design and build our homes has a positive impact on the people and communities
who live in and around our developments. Our creative, design-led approach to creating
communities where people want to live is at the heart of what we do and ensures we leave
a lasting positive legacy.

By continuing to focus on the five areas that are most material to our business, we have made
excellent progress in delivering our key sustainability objectives over the past year. Our focus areas
ensure that we continue to support and create value for our key relationships and resources

We believe that it is the responsibility of our workforce and supply chain to support the delivery
of our sustainability strategy. To help with this we ensure we communicate our policies, procedures
and processes (see our Non-Financial Reporting Statement on page 50) and provide the right tools
and training to support our people.

The process for defining our material issues and detailed objectives can be viewed online in our
2018 Sustainability Report at https://www.countrysideproperties.com/media/3866/download

Wren Green, Bamber Bridge

Countryside Properties PLC / Annual report 2019 41

Sustainability report continued

Our performance
2019 has seen significant progress against some
of our strategic sustainability objectives. The
biggest achievement has been the introduction
of the Building Research Establishment (“BRE”)
online SmartWaste reporting tool across the
Group which has helped us improve our data
collection and reporting processes for waste,
energy and water. Our environmental data has
been given limited assurance by RPS Group
and we are pleased to be able to fully report
our environmental impact this year.

In April 2018 we acquired Westleigh Homes
and the integration and reporting of historical
Westleigh sites coupled with increased
production and the growth of the business
have led to an increase in our absolute energy
use and waste production.

Sustainability benchmarking
We continue to disclose our performance
through public reporting benchmarking
initiatives. For a second year, we have been
a constituent of the FTSE4Good Index series.
In addition, we participate in the Carbon
Disclosure Project (“CDP”) benchmarking
schemes for climate change and forestry in
2019. We await the disclosure of our scores.

42 Annual report 2019 / Countryside Properties PLC

Social Value in action
at South Oxhey

South Oxhey, a development within our
Partnerships South division based two miles
south of Watford, has become our first site to
provide a year’s worth of verifiable social value
data. Our dedicated administration team has
implemented effective processes to collect
the data from our contractors and verify its
accuracy, and we are pleased to be able to
quantifiably demonstrate the contribution the
site is making to the local community, including:

• £307,711 spent in the local supply chain;

• 250 hours of volunteering time provided to

support local community projects;

• 222 weeks of work completed by

apprentices;

• £4,000 of social value delivered through

initiatives to reduce crime; and

• 174 homes to be constructed over two and

half years with just under 30%
being affordable homes.

Using South Oxhey as a benchmark, we will
begin to roll out similar processes and controls
across all our sites. By next year, we hope to
be able to provide verifiable data for the
whole Group.

St. Michael’s Hurst, Bishops Stortford

GOVERNANCE

The Board is responsible for the overall
governance of sustainability issues, risks and
opportunities. A strong and structured
governance is key to achieving our objectives as
is the support and participation of our staff and
our supply chain. Dedicated committees assist
this process at different levels of the business.

Risk management
The Board has overall responsibility for the
assessment and management of risk, assisted
by the Risk Management Committee (see pages
51 to 55 for more detail on risk management).
Oversight of more detailed aspects is managed
through the Health, Safety, Environment and
Quality Committee, which meets quarterly.

We maintain an Environmental Aspects,
Impacts and Opportunities Register which
identifies environmental risks and opportunities
throughout all our activities. The register is
reviewed twice annually against the corporate
sustainability targets, to ensure they are fit for
purpose and that systems are in place to
enable their achievement.

Management systems
In accordance with our approach to
continuous improvement and managing risk,
the Group has maintained its full accreditation
to ISO 9001:2015 (Quality) and ISO 14001:2015
(Environmental). For the first time the Group
has been accredited to ISO 45001:2018
(Health and Safety), which has replaced the
older OHSAS 18001 standard.

We amalgamated the former Westleigh regions
into the Group’s accreditation to ISO45001
during 2019. We will be extending our
accreditations to ISO9001 and ISO14001
to these regions in 2020. This will ensure
uniformity and consistent management across
the business.

Legal compliance
We are pleased to report that we continue
to uphold our good record in environmental
compliance, with no prosecutions or fines
for more than 14 years. Countryside has not
received any HSE Enforcement Notices in
over 11 years.

See pages 51 to 55 for further details on our
risk management process

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Risk is managed internally through our risk management process:

Corporate

Offices

Land
acquisition

Pre-start

Site

HEALTH AND SAFETY

QUALITY

ENVIRONMENT

High level risk register

Legislation register

CPPLC office-based risk
assessments

Aspects and impacts and
legislation register

CPPLC office-based
environmental risk register

Contractor risk assessments, COSHH assessments and method statements

Fire Risk Assessments

Land acquisition pack and checklist

Soil surveys
Flood risk assessments

Ecological surveys

Design risk assessment

Start on site packs and checklists

Site global assessment of risks

CPPLC fire risk assessment

CPPLC site health and safety
risk assessments

CPPLC site specific
environmental risk register

Sub-contractors health and safety, and environment risk assessments, COSHH assessments and
method statements

Post
completion

CPPLC customer services health and safety risk assessments, COSHH assessments
and method statements

CONTROLS
Internal audit, third-party audit, management review, checklists, meetings and surveys

Countryside Properties PLC / Annual report 2019 43

Sustainability report continued

ETHICAL AND
RESPONSIBLE BUSINESS

CUSTOMERS
AND COMMUNITY

At Countryside we strive for continuous health and safety improvement
and promote social and ethical best practice.

Ethical business
Our policies and procedures are designed to ensure we and our supply
chain comply with UK law and best practice guidelines in areas including
business conduct, equal opportunities, anti-corruption, whistleblowing
and countering modern slavery and human trafficking. These policies and
further information on our approach to modern slavery can be found on
our website at
https://www.countrysideproperties.com/sustainability/modern-slavery-act.

In response to the new requirements of Sections 414CA and 414CB of
the Companies Act 2006, see our Non-Financial Reporting Statement on
page 50.

Health and safety
Health and safety is our number one priority and we are committed to
delivering the highest standards in all health, safety and welfare matters,
both for the benefit of society as a whole and anybody who may be
affected by our operations.

We have stringent systems in place to manage these risks and we
continually review and look to improve our processes. This has ensured
that our Annual Injury Incident Rate (“AIIR”) was below both the
industry average and the Health and Safety Executive’s National Incident
Rate (“NIR”) for the 16th consecutive year in 2019. Our AIIR averaged
227 (2018: 188) compared with the NIR of 405 (2018: 446). Whilst we
are disappointed that our AIIR was higher in 2019 than it was in 2018,
our average AIIR over a five-year period remains stable, at well below the
NIR. Nonetheless, we are taking a series of actions to address the
increase for 2019 including: (i) the introduction of a new accident and
near miss reporting system to identify and help address any trending
issues more quickly; (ii) adoption of the Health & Safety Executive’s SLAM
(Stop, Listen, Access and Manage) technique, to raise worker awareness
of potential hazards; and (iii) roll-out of a new safety observation
reporting system, to encourage greater workforce engagement in the
active and early identification of health and safety issues. As always, we
continue to work closely with our contractors to ensure continuous
improvements in health and safety performance across all of our sites.

In 2019 we introduced mental health first aiders into the Group as part of
our focus on mental health and wellbeing. We plan to further expand this
programme in 2020 as part of our continued drive to make the
workplace a safe and healthy environment for employees, contractors
and visitors.

Our people
Our people are our most valuable and important resource. Please see
our dedicated People section on pages 38 to 40 of this report for
information on how we seek to engage and develop our employees.

44 Annual report 2019 / Countryside Properties PLC

Customers
Buying a new home and moving into a new community is one of the
most significant decisions a person makes, and we believe this should
always be an exciting and enjoyable experience. This is why we continue
to aspire to be a five-star builder and ensure our customers’ needs are
continually exceeded.

Our Recommend a Friend score for the year to 30 September 2019 has
increased to 92.5% (2018: 84.6%). We are not complacent about
performance and are enhancing the customer journey to ensure we
maintain five-star performance through the continued review of
customer feedback and other engagement tools. We will continue to
hold regular customer service focused forums internally and highlight
to our staff and contractors their role in providing a smooth, stress-free
and enjoyable customer journey.

The availability of affordable housing has been identified as a material
issue for our customers and the local community. We are working closely
with the local authorities where we operate to deliver quality affordable
homes that deliver the requirements of their tenants. In 2019 38% of
our completed homes were affordable.

Countryside employees volunteering

Case study: Volunteers’ Week

In June, in support of Volunteers’ Week, teams from Countryside gave up
their time to volunteer at different charities and community organisations
across the UK.

A team of employees helped with garden maintenance at Kids Inspire, an
Essex-based charity, which uses art, drama and play therapy to help
disadvantaged young people turn their lives around and claim back their
future. Many of the children supported by the charity are at an
educational, social and/or economic disadvantage resulting from trauma
or emerging mental health issues.

Another charity supported was the Huyton Resource Centre in
Liverpool, which is part of the Knowsley Community Hub, which grows
food with the community, for the community. Countryside spent the day
building a potting table for children to use when planting. The charity’s
goal is to reduce food poverty, isolation and loneliness, whilst also
boosting health and wellbeing through horticulture.

At Countryside, we are always looking for new ways to give back to the
communities in which we work, so we are pleased to have several other
volunteering days already lined up for the near future.

Community
Creating “Places People Love” is core to our business; this is not just for
our customers but for those residents and businesses in the local area.
We pride ourselves in creating great places for everyone to enjoy. We have
been a leader in design, placemaking and sustainable development, and since
2000 have won 381 sustainability and design-related awards.

We always aim to have a positive effect on the communities in and
surrounding the areas in which we build. However, we appreciate
that existing and future residents may have concerns about potential
impacts during the construction phase of our developments.
We therefore put stringent procedures in place at every site to reduce
any nuisances caused by our operations and actively engage with the
local community at all phases of a development to address any queries
or concerns they may have. We believe that local communities have
a right to enjoy their homes and environment without disturbance.

Social value
As part of our ongoing commitment to provide value to the local
communities, we have started to monitor the social value we add to new
and evolving communities. We aim to make a real difference to people’s
lives by enhancing the social, environmental and economic wellbeing of
those communities in which we operate, both during and post construction.

To help us achieve our goal, we have partnered with the Social Value
Portal to help us measure, manage and report our financial and
non-financial impacts through their online data collection tool. After a
successful trial on three pilot projects within the Partnerships South
division, the portal was rolled out to all sites within the first quarter of
2019. Our dedicated Social Value Manager is responsible for delivering
our social value policy and establishing effective management systems
to maximise the benefits of the project across the Group.

A Social Value and sustainability Committee meets monthly with
representatives from across all three divisions. Its objective is to set the
strategy and communicate the purpose and social value benefits to our
workforce, our supply chain and the communities in which we operate.
Communication channels include social value masterclasses to employees,
training workshops and bi-monthly “user groups” which act as a support
network for the appointed social value administrators. As the project
is still in the early days, we recognise that there is further work to do
to embed the social value principles throughout the business. Our focus
for 2020 will be to improve our data gathering and reporting, set group
targets and select charity partners that support the aims and objectives
of our strategy.

We have developed a set of Themes, Outcomes and Measures (“TOMs”)
which represent practical social value outcomes that Countryside can
deliver. The TOMs are expressed in financial terms, drawing on a wide
range of data sources such as the Office of National Statistics.

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Hannah and Sam, first time buyers at Wren Green, Bamber Bridge

Case study: Buyers save deposit in record time

On average it takes most homeowners two years to save for a 5% deposit
but for first-time buyers Hannah and Sam it took just six months to save
for their dream home with Countryside.

Hannah (23) and Sam (26) have now moved into their brand new
three-bedroom house at our popular Wren Green development in
Bamber Bridge, thanks to the Government-backed Help to Buy scheme.

Sam commented: “We’d originally planned to buy our first home in
early 2020, thinking we would need the extra time to get our deposit
together. We’ve been saving really hard, living at home, cutting down
on takeaways and nights out, but when we spoke to Countryside,
we realised we could buy far sooner than we thought.”

Hannah and Sam used the Government-backed Help to Buy scheme to buy
their dream home and are now starting their new life in Bamber Bridge.

Hannah added: “As first-time buyers we knew we were going into the
whole thing blind but the support of the team at Countryside has been
amazing. They have explained everything, and they’ve been there to help
us along the way. Everything Countryside has done for us has allowed us
to move into our new home as quickly and easily as we can.”

We’ve been saving really hard, living at home,
cutting down on takeaways and nights out, but
when we spoke to Countryside, we realised we
could buy far sooner than we thought.”

Countryside Properties PLC / Annual report 2019 45

Sustainability report continued

ENVIRONMENT

Our values, compliance requirements and
stakeholder needs shape all aspects of our
business, but they particularly inform our
approach to environmental sustainability. We
set key objectives and measure performance
against them in order to ensure continual
improvement and encourage innovation.

The implementation of BRE’s online
SmartWaste reporting tool this year has
improved our data collection process. The
system is used to monitor and measure our
energy, water and waste data on each site.
In some cases, our consumption figures have
increased; we attribute this not only to the
growth of the business, but also the inclusion
of the former Westleigh sites and offices and
more accurate data gathering and monitoring.

Intensity for energy and water figures is calculated using the formula usage/m2 completed area
for site activities and usage/employee for office and fleet activities. The intensity measure for waste
figures is calculated using the formula tonnes of waste produced/100m2 completed internal area for
site activities and waste produced/employee for office activities. We are identifying an intensity factor
for our manufacturing activities to be used in 2020; in 2019, manufacturing data is absolute only.

Office activities

Scope 1

Scope 2

Total GHG

Gas
CO2e
(tonnes)

Total
CO2e
(tonnes per
employee)*

203

208

0.05

0.12

0.18

Gas
(mWh)

537

1,103

1,127

Electricity
(mWh)

1,741

1,420

1,281

Electricity
CO2e
(tonnes)

Total
CO2e
(tonnes per
employee)*

Total
CO2e
(tonnes)

Total CO2e
(tonnes per
employee)*

445

402

450

0.24

0.23

0.39

544

605

658

0.29

0.35

0.57

Year

2019

2018

2017

* Office intensity measure is based on 1,851 employees (2018: 1,753).

Energy
For the fourth year, we have collated and are
reporting on our energy, water and waste
performance across the business. For the first
year we are reporting the environmental
performance of our factories. We are reporting
absolute data and intensity measured data.

During the reporting period, we reduced our overall office based CO2e emissions by 10.1% to
544 tonnes CO2e (605 tonnes CO2e in 2018). The reduction in overall emissions is due to our
continued drive to reduce consumption and move to more energy efficient ways of working.
Our Scope 1 emissions have reduced by 53% per employee which is mainly due to the move
to modern offices with heating systems powered by grid electricity instead of more conventional
gas systems. As a consequence, there has been an increase in our Scope 2 emissions, which have
risen by 6% per employee.

Site activities

Year

2019

2018

2017

Scope 1

Scope 2

Gas
(mWh)

4,837

6,501

4,761

Gas
CO2e
(tonnes)

889

1,196

877

Gas oil
(mWh)

Gas oil
CO2e
(tonnes)

Total
(mWh)

Total CO2e
(tonnes)

Total CO2e
(tonnes
per m2)*

Electricity
(mWh)

Electricity
CO2e
(tonnes)

Total CO2e
(tonnes
per m2)*

16,582

4,389

21,419

5,278

0.009

4,913

1,331

11,433

14,933

3,161

4,120

17,934

19,694

4,357

4,997

0.011

0.009

3,544

5,040

1,003

1,772

0.002

0.003

0.004

* Site intensity measure kg CO2e/m2 based on developed area of 603,173m2 completed build (2018: 397,702m2).

Although our absolute energy usage has increased due to the increase in build and number of sites, our usage per m2 completed area has reduced for
Scope 1 and Scope 2 energy. In 2020 we plan to improve our energy use further by reviewing the use of oil powered generators and equipment on
site to identify ways in which we can reduce their use, and therefore our related CO2e emissions.
Manufacturing

Year

2019

Scope 1

Scope 2

Gas
(mWh)

12.0

Gas
CO2e
(tonnes)

Gas oil
(mWh)

Gas oil
CO2e
(tonnes)

Total
(mWh)

Total CO2e
(tonnes)

Electricity
(mWh)

Electricity
CO2e
(tonnes)

2.2

44.9

11.5

56.9

13.7

325.7

86.9

Scope 1: These are emissions that arise directly from sources that are owned or controlled by the Company, for example from fuels used in generators
and plant on our sites.

Scope 2: These are the emissions generated by purchased electricity consumed by the Company.

46 Annual report 2019 / Countryside Properties PLC

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Business travel
Scope 3: These emissions are a consequence of the activities of the
Company but occur from sources not owned or controlled by the
organisation. This includes emissions associated with business travel.

Year

2019

2018

2017

CO2e
(tonnes)

1,827

1,656

1,597

Total CO2e
(tonnes per
employee)*

0.99

1.27

1.37

* Fleet intensity measure is based on 1,851 employees (2018: 1,307 excluding Westleigh Homes

employees as their fleet data was not available).

Our overall fleet CO2e emissions increased to 1,827 tonnes from
1,656 tonnes in 2018, in line with our increase in staff numbers. However,
we decreased our emissions per person by 22% to 0.99 tonnes CO2e
per employee (2018: 1.27).

In 2019 we introduced the option of hybrid vehicles and rewards for our
employees selecting low emission vehicles. We intend that this, coupled
with improved teleconferencing facilities, cycle to work schemes and
promotion of the use of public transport, will reduce our travel
emissions further.

Waste
Waste has been identified as a key issue for the Company, both from its
adverse effects on the environment and cost to the Company. The new
online SmartWaste system provides an accurate breakdown of waste
helping us to target our highest risk areas and implement initiatives to
reduce certain waste streams.

Despite our overall waste increasing, due to the inclusion of the former
Westleigh sites in our data management systems, construction waste
produced per 100m2 completed build area has reduced by 10% to
6.9 tonnes (2018: 7.7 tonnes). A waste forum continues to meet quarterly
which aims to improve co-ordination across the different business regions,
implement waste reduction initiatives, improve awareness of best practice
in waste management on site and ensure compliance.

Office activities

Year

2019

2018

2017

Total
general
waste
(tonnes)

Total general
waste
(tonnes per
employee)*

179

318

387

0.10

0.18

0.33

Recycled
(tonnes)

%
recycled

149

265

206

84%

83%

53%

* Office intensity measure based on 1,851 employees (2018: 1,753).

Site activities

Year

2019

2018

2017

Total
waste
(tonnes)

41,728

30,724

30,169

Total waste
(tonnes)
per 100 m2
completed *

Reused/
recycled/
composted
(tonnes)

Reused/
recycled/
composted

Energy
from waste
(tonnes)

Energy
from waste

6.9

7.7

6.0

35,562

24,981

25,544

85.2%

81.3%

84.7%

5,136

5,558

4,289

12.3%

18.1%

14.2%

Landfill
(tonnes)

1,030

185

336

%
diverted
from landfill

97.5%

99.4%

98.9%

%
landfill

2.5%

0.6%

1.1%

* Site intensity measure tonnes/100m2 based on developed area of 603,173m2 completed build (2018: 397,702m2).

Manufacturing

Year

2019

Total
waste
(tonnes)

Recycled
(tonnes)

%
recycled

Energy
from waste
(tonnes)

% energy
from waste

Landfill
(tonnes)

%
diverted
from landfill

%
landfill

445.9

354.1

79.4%

80.5

18.1%

11.3

2.5%

97.5%

Water
We use water in our welfare facilities, for dust suppression, cleaning and wheel wash systems, and we are committed to reducing the amount of water
we use in our operations. We do this by monitoring both our consumption (water in) and the amount of water we dispose of (water out). For the
first time this year, we have recorded the water usage at our factories. Our site water use decreased for the third year in a row from 33,414m3 (2018)
to 22,816m3. This is also a reduction in the normalised water consumption to 0.04m3 per m2 from 0.08m3 per m2 in 2018. Our office water decreased
to 9,361m3 (2018: 10,387m3) which equates to 5.1m3 per employee (2018: 5.9m3). This is a decrease of 14% per employee. This is due to the move to
more water efficient offices.

Office activities

Site activities

Year

2019

2018

2017

Water in
(m3)

9,361

10,387

8,976

Water in
(m3 per
employee) *

5.1

5.9

7.7

Year

2019

2018

2017

Water in
(m3)

Water in
(per m2) *

22,816

33,414

42,653

0.04

0.08

Water out
(m3)

14,447

Water out
( per m2) *

0.02

Not reported

* Office intensity measure based on 1,851 employees (2018: 1,753).

(2018: 397,702m2).

* Site intensity measure m3/100m2 based on developed area of 603,173m2 completed build

Countryside Properties PLC / Annual report 2019 47

Sustainability report continued

ENVIRONMENT CONTINUED

SUPPLY CHAIN

Water continued
Manufacturing

Year

2019

Water in
(m3)

1,036

Water out
(m3)

1,036

Resource use
Our Group buying department is responsible for the selection and sourcing
of sustainable products. All the timber we procure is certified to the
Forest Stewardship Council (“FSC”) or Programme for the Endorsement
of Forest Certification (“PEFC”) schemes. We are also committed to
minimising our resource use and in 2020 we plan to engage our supply
chain further to identify ways to improve our monitoring of resource use
and work together towards a more circular economy. We will fully report
our timber purchasing and use within the 2020 Sustainability Report.

Transport
When planning our developments, we aim to provide our customers
with a range of sustainable transport options, to not just limit the impact
of new homes on existing infrastructure, but also to future proof our
developments in a time when the transport mix is changing. We provide
an increasing number of cycling facilities and electric charging points at
our developments and in 2019 we developed Green Transport Plans
for seven of our strategic sites. In 2019, 97% (2018: 96%) of our
developments were located within 1km, and 82% (2018: 84%) were
within 500m, of a public transport node.

Biodiversity
We are committed to establishing and enhancing ecological networks
and habitats that are resilient to the current and future pressures of
climate change. During the year, we installed green or brown roofs
on 13% of our developments (2018: 23%). The decline is due to the
integration of Westleigh sites which already had planning permission
without green or brown roofs prior to our acquisition.

We are currently researching how to achieve and monitor a net
biodiversity gain on our future developments, and we hope to have
a methodology in place in 2020.

We aim to work with suppliers and sub-contractors who share our values.
They must support our business by operating safely, efficiently and ethically
whilst reducing adverse effects on the environment. We require all supply
chain members to complete a pre-qualification process that assures us
they live up to these values. We regularly engage with them to ensure
they meet our requirements. We also work with them to improve their
standards, and therefore our own as well. Our Sustainable Procurement
Policy sets out our commitments and our standards. This is available to
read at https://www.countrysideproperties.com/media/1553/download.

In 2020 we plan to engage further with our supply chain on health, safety
and environmental issues. We will be arranging further CITB health and
safety courses for sub-contractors and will be engaging with our waste
carriers and other parts of our supply chain to implement joint waste
management and reduction projects on our sites.

Parklands Manor, Oxfordshire

Case study: Conservation and development
in partnership
In spring 2019 our Millgate Homes Parklands Manor development in
Oxfordshire received a visit from the BBC Countryfile Spring Diaries
team to report on a new scheme being trialled across several local
authorities with the aim of protecting great crested newts. The possible
presence of great crested newts (a protected species under European
and United Kingdom law) had been identified in an ancient pond adjacent
to the brownfield site, a former manor house and school.

We were approached by Naturespace to trial the scheme on our site.

Funding and pond habitats in other areas were given to Naturespace
which allowed us to obtain a licence which met local authority and legal
requirements and enabled mitigation for the newts both on and off site,
without works being delayed. This included the installation of reptile fences
on site which are monitored and maintained by specialist contractors.

Despite being a brownfield site, the development is situated in a rural
area near Oxford with woodlands and public footpaths adjacent to the
site. We are further protecting ecology on the site by installing bat boxes
on mature trees and installing further habitats for bats and birds on site.

48 Annual report 2019 / Countryside Properties PLC

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Cllr David Molyneux and Countryside Trainee, Ben Ashcroft

There was so much
about housebuilding
that I didn’t know
before starting with
Countryside and I’m
finding it very
rewarding.”

FOR OUR PARTNERS

Ben Ashcroft – trainee at modular panel factory
Countryside works closely with local authorities in a variety of ways, with
a particular focus on supporting the communities surrounding our developments.
Countryside has made a commitment to invest in training for local people
and, following the launch of our modular panel factory in Warrington earlier
this year, this includes working in close partnership with Wigan Council to
provide trainee opportunities at the factory.

In September, we welcomed the Leader of Wigan Council, Cllr David
Molyneux, to the modular panel factory where young people are currently
being trained. Working with the Council, Countryside is bringing extensive
investment in training and employment for the borough.

Cllr Molyneux says: “It was very interesting to see the factory. North Leigh
Park is a key brownfield site allocated in our local plan and regeneration
strategy. Without this development, there would be a lot of pressure on
our greenbelt, so we will continue to work with Countryside to ensure
it suits local need. I sincerely hope the apprentices enjoy working on this
development and I am sure they will learn a lot from the professionalism
and commitment shown by Countryside.”

Ben Ashcroft, a Wigan resident, has been working at Countryside since
March 2019, and comments: “My apprenticeship means that I can learn
as I work but it also gives me the chance to learn from those around me.
There was so much about housebuilding that I didn’t know before starting
with Countryside and I’m finding it very rewarding.”

Ian Kelley, Chief Executive, Partnerships North, adds: “We’re very proud to
welcome David Molyneux to our modular panel factory, to open our doors
and share insight on the innovative practices that are transforming how
we build our homes. Embracing modern methods of construction is very
important to our business, and we’re proud to do so while upskilling the
future workforce.”

Countryside currently employs twelve apprentices across the North West,
seven of whom are from Wigan and work across our local sites, as well as
the modular panel factory.

Countryside Properties PLC / Annual report 2019 49

Non-financial information statement

This section provides compliance with Non-Financial Reporting Directive
requirements. The table below provides a quick guide to Countryside’s
non-financial activities and where to find more information on them.
Those policies available on the Countryside website are marked with
an asterisk. Other policies are internal and made available to the
workforce via the Company intranet.

Key topic areas

Major supporting policies

Other information

Environmental matters
(including the impact of
the Company on the
environment)

Environmental Policy*

Climate Change Policy*

Sustainable Development Policy*

Group KPIs: business sustainability and use of
natural resources

Waste Policy*

Biodiversity Policy*

Sustainable Procurement Policy*

Timber Policy*

The Company’s
employees

Business Ethics and Code of Conduct*

Our people

Equality Diversity and Inclusion Policy*

Nomination Committee Report

Board Diversity Policy

Health and Safety Policy

Respect for human
rights

Modern Slavery Statement*

Our people

Business Ethics and Code of Conduct*

Group KPIs: business sustainability

Equality Diversity and Inclusion Policy*

Health and Safety Policy*

Information Privacy Policy*

Social matters

Business Ethics and Code of Conduct*

Sustainability

Health and Safety Policy*

Community and Charitable Donations Policy*

Group KPIs: business sustainability and use of
natural resources

Social Value Policy*

Volunteering Policy*

Anti-bribery and
corruption compliance

Anti-Bribery and Corruption Policy*

Gifts and Entertainment Policy*

Money Laundering Policy*

Page(s)

46–48

38–40

72–73

38–40

46–48

41–49

46–48

Other

Quality Policy*

Group KPIs

24–25

50 Annual report 2019 / Countryside Properties PLC

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Risk management

Careful risk management
is critical to the long-term
sustainability and success
of Countryside.”

Optimising our risk
management process
This section describes how Countryside
determines its appetite for risk, how risks are
identified and quantified, and how they are
managed and mitigated appropriately in order
to deliver the Group’s strategic objectives.
It describes Countryside’s policies and procedures
for the timely identification, assessment and
prioritisation of the Group’s material risks
and uncertainties.

How we manage risk
The Board oversees risk management within
Countryside. At its March 2019 Strategy Day,
it determined the Group’s overall risk profile
and appetite for risk, the results of which have
been implemented through the conduct and
decisions of the Board and Executive Committee.
In July 2019, the Board carried out its annual
assessment of risks and it routinely considers
individual risks at each of its Board meetings.

Risk identification and management is built into
every aspect of Countryside’s daily operations,
ranging from the appraisal of new sites, assessment
of the prospects of planning success, building
safely and selling effectively to achieve long-term
success through the property market cycle.
Risk management is built into standardised
processes for each part of the business at
every stage of the housebuilding process.
Financial risk is managed centrally through
maintenance of a strong balance sheet, forward
selling new homes and the careful allocation
of funds to the right projects, at the right time
and in the right locations. Risk management
also includes the internal controls described
within the Corporate Governance Report
on pages 62 to 66.

The Risk Management Committee (“RMC”) meets
at least four times a year and provides a focal
point for the co-ordination of the Group’s risk
management efforts. Its membership comprises
all members of the Executive Committee and
the Director of Audit and Risk Assurance and
it is chaired by the Group Chief Executive.

The standing business of the RMC
includes reviewing:

• the Group risk register, mitigation plans and

internal controls;

• for each risk, the assessment of gross and

net risk versus risk appetite, risk progression
and adequacy of mitigating actions;

• the Internal Audit plan, reports and progress

against recommendations;

• the management of claims and litigation;

• reports of whistleblowing and fraud;

• the forecast impact and preparation for

proposed and new legislation;

• key policies and risk mitigation documentation

(e.g. start on site or land acquisition
checklists); and

• total cost of risk against insurance and

bond requirements.

At each RMC meeting, a different “principal
risk” is reviewed in depth. A description of the
key areas of risk considered during 2019 is set
out below.

Meetings of the management boards of each
regional business are held regularly and review
all operational risks. All such regional board
meetings are attended by the relevant
Divisional CEO, who in turn feeds back any
matters requiring consideration by the RMC.

Our approach to risk

Role and responsibilities

• Sets the Group strategy

The Board

• Determines the Group’s risk policy, overall appetite for risk and the procedures that are put in place

• Regularly monitors Group risks and their progression in comparison to the agreed appetite for each risk

• Reviews the effectiveness of the Group’s risk management and internal control procedures

Audit Committee

Internal Audit

Role and responsibilities

• Has delegated responsibility from the Board to

• Undertakes independent reviews of the

oversee risk management and internal financial controls

effectiveness of internal control procedures

• Monitors the integrity of the Group’s financial

• Reports on the effectiveness of

reporting process

management actions

• Monitors the effectiveness of the Internal Audit

• Provides assurance to the Audit Committee

function and the independence of the external audit

Risk Management Committee

Role and responsibilities

• Manages the Group’s risk register and assessment of net risk versus risk appetite

• Determines the appropriate controls for the timely identification and management of risk

• Monitors the effective implementation of action plans

• Reviews reports from the Internal Audit function

• Reviews principal claims and litigations

• Reviews the annual renewal of Group insurance cover

Executive Committee

Role and responsibilities

• Responsible for the identification of operational and strategic risks

• Responsible for the ownership and control of specific risks

• Responsible for establishing and managing the implementation of appropriate action plans

Countryside Properties PLC / Annual report 2019 51

Risk management continued

Risk identification and
management is built
into every aspect of
Countryside’s daily
operations.”

Optimising our risk
management process continued
How we manage risk continued
The Group’s risk register is maintained to record
all principal risks and uncertainties identified in
each part of the business. The most appropriate
member of the Executive Committee is allocated
as the “risk owner” for each risk. The risk owners
call upon the appropriate expertise to conduct
an analysis of each risk, according to a defined
set of assessment criteria which includes:

• How does the risk relate to the Group’s

business model and/or strategy?

• What is the likelihood of the risk occurring?

• What is the potential impact were the risk

to occur?

• Would the consequences be short, medium

or long-term?

• What mitigating actions are available and

which are cost effective?

• What is the degree of residual risk and is it

within the Group’s risk appetite parameters?

• Has the risk assessment changed and what is

expected to change going forward?

The RMC reviews the assessments made,
compares them to the Group’s appetite for each
risk, reviews the current level of preparedness
and determines whether further actions or
resource are required. In reviewing and agreeing
the mitigating actions, the RMC considers the
impact of risks individually and in combination,
in both the short and the longer term.

Key areas of focus during 2019
Market
Given that Countryside continues to grow,
there has been renewed focus during 2019
on the Group’s mixed-tenure approach to
both improve the quality of returns and
maintain resilience in the event of a market
downturn. Improvements have been made
to the timely reporting of key sales data to
enable management to monitor and react
appropriately to any changes in market activity.
With the opening of the Warrington modular
panel factory in April 2019, we are committed
to embracing innovation to reduce reliance on

52 Annual report 2019 / Countryside Properties PLC

sub-contract labour, secure the supply chain
and achieve on-site efficiencies. Increasing
off-site production will further improve
product quality and drive improvements
in customer satisfaction.

Government policy and
regulatory change
Whilst the current Government backed Help
to Buy scheme arrangements will end in 2021,
the Government has announced that a revised
Help to Buy scheme will extend to spring 2023.
During the extension period, regional caps
(set at 1.5 times the current average first-time
buyer price in each region) will apply. Measures
have been introduced so that all new site proposals
reviewed by management and the Board for
approval take account of the availability of Help
to Buy funding when determining product mix.

Following Government consultation after
the Grenfell Tower tragedy and in light of
recommendations made by Dame Judith Hackitt’s
final report on building regulations and fire
safety, an amendment to Approved Document
B of the Building Regulations was issued in
December 2018. The amendment bans the
use of combustible materials in the external
walls of high rise residential buildings and
bans the use of assessments in lieu of testing
(so-called desktop studies). Measures are in
place to ensure all ongoing and future building
projects fully comply with the amended regulations.
A Technical Standards Fire Committee, made
up of the technical directors from each division,
representatives of health and safety and legal and
chaired by the Divisional CEO of Partnerships
South, has been established to ensure uniform
compliance across the Group with the revised
regulations and any advice issued by Government,
such as the June 2019 advice relating to
buildings with balconies.

Following concerns raised by homeowners
about the leasehold tenure of their property
or the terms of their ground rent escalation
clause, the Government has launched two
consultations into leasehold properties and
potential reform. The proposals include a
ban on the sale of leasehold houses and plans
to lower future ground rents to a nominal fee.
Countryside no longer sells leasehold houses
and has signed the Public Pledge for Leaseholders
(https://www.gov.uk/government/publications/
leaseholder-pledge/public-pledge-for-leaseholders).

In June 2019, the Competition & Markets
Authority commenced an investigation into the
sale of leasehold properties and in July 2019,
the Government published its response to the
Housing, Communities and Local Government
Select Committee report on Leasehold Reform.
Countryside is working closely with industry
peers, the HBF and other stakeholders to
prepare for and address any required changes.

Brexit
Since the result of the referendum vote to leave
the European Union (“EU”) in June 2016
(“Brexit”), management and the Board have
developed and maintained detailed reviews on
Countryside’s exposure to risks that may flow
from the United Kingdom’s departure from the
EU. Key risks have been identified, such as the
supply of materials and labour, the availability
of capital and potential changes to Government
regulation and policy, and mitigating actions and
plans are in place to address the challenges
should they arise.

Most of our building supplies are manufactured
in the UK and are not at risk from Brexit.
Where possible, we endeavour to purchase
key supplies in bulk via national agreements and
have preferential partnerships with many of
our suppliers. Those products that have an
element imported from the EU are mainly
sourced through a network of UK-based
suppliers. In the event of a worst case no-deal
Brexit outcome, there is a risk that our supplier
network may experience delays in their own
supply chain and we are working closely with
these distributors to understand any issues
they may face. We have conducted a thorough
analysis of this risk, including reviewing all such
first and second tier material origins, fixed price
duration, World Trade Organisation (“WTO”)
tariff impact and logistical restrictions. Where
appropriate, we have worked with supply chain
partners who have increased stock levels and,
where necessary, the quantum of stock held
at sites has been increased to secure critical
EU-sourced goods.

The Government has published details of the
UK’s temporary tariff regime in the event of a
worst case no-deal Brexit. The tariff regime is
designed to minimise costs to business and its
effect would be that the bulk of Countryside’s
EU imports would be eligible for tariff-free
access. The only commodity that appears
to impact our business is ceramics. We have
worked with relevant suppliers to ensure we
can access materials from outside the EU to
mitigate this risk where required.

We are working with our workforce and
suppliers to monitor any trends, but to date
have not experienced material changes that
might affect production. The introduction of
the Government’s “settled status” scheme is
reasonably expected to materially mitigate the
risk that large numbers of EU workers would
otherwise be required to leave the UK.

Our internal auditor, KPMG, has recently
tested Countryside’s resilience in areas of
business continuity and disaster recovery,
including in the event of a no-deal Brexit.
Actions have been taken to address all
potential areas identified for improvement.

Attracting and retaining talent
Recruiting, retaining and developing highly
skilled and competent people at all levels of
the organisation remains a key challenge
whilst the competition for talent in a growing
homebuilding industry remains fierce. During
2019 considerable effort has been made to
ensure that Countryside is able to participate
and win in the competition for talent. The
roll-out of extended flexible benefits has
proven very successful, along with improved
study support, enhanced maternity and
paternity policies, personal and professional
development and training, enlarged graduate
and apprenticeship schemes, additional
recruitment resources and the determination
to implement feedback obtained from employee
engagement (as described on pages 38 to 40).

Westleigh acquisition
Following the acquisition of Westleigh in 2018,
its integration into the Countryside Group and
its compliance with Countryside’s policies and
procedures is now complete. This has resulted
in considerable strengthening of a number of
Westleigh’s compliance functions, including
health and safety, legal, environmental and
quality. In November 2018, all Westleigh
branding was replaced with the Countryside
brand name.

Improving assurance and
standardisation
As Countryside continues to grow, both
organically and through the acquisition of
Westleigh, ensuring that processes, procedures
and risk mitigation actions are implemented,
standardised and uniformly applied is critical.
Countryside’s investment in audit and
assurance has been increased to address this
ongoing requirement, leading in June 2019 to
the appointment of a new Director of Audit
and Risk Assurance.

Viability Statement
The following statement is made in accordance
with the UK Corporate Governance Code
(April 2016) provision C.2.2. After considering
the current position of the Company, the
Directors have assessed the prospects and
viability of the Company over a three-year
period to September 2022. In making this
statement, the Board has performed a robust
assessment of the principal risks facing the
Company, including those risks that would
threaten Countryside’s business model, future
performance, solvency or liquidity. The principal
risks facing Countryside and how the Company
addresses such risks are described in this
Strategic Report and are summarised in the
Principal Risks section of this report.

Although longer-term forecasts are prepared
to support the strategic planning process, the
nature of the risks and opportunities faced
by the Group limits the Directors’ ability to
reliably predict the longer term. Accordingly,
a three-year horizon is used to allow for a
greater degree of certainty in our assumptions.

The Directors’ assessment includes a financial
review, which is derived from the Group’s
strategic forecasts and identifies divisional
business performance, expected cash flows,
net debt headroom and funding covenant
compliance throughout the three years under
review. These forecasts also incorporate
severe but plausible downside case scenarios,
illustrating the potential impact upon viability
of one or more of the Group’s principal
risks crystallising during the period, both
individually and in combination.

A number of key assumptions are included
within these assessments, including:

• the assumption that the Group’s debt facility,
which expires in 2023, will continue to be
available on the same or similar basis
throughout the period under review;

• the assumption that, following a material event,
the Group would adjust its strategy accordingly
to preserve cash. This would include, inter
alia, suspending the purchase of land, changing
the build profile of existing developments or
adjusting Group dividend policy;

• the assumption that counterparties including
local authorities and housing associations
honoured the phased viability terms and
conditions contained in a number of the
Group’s Partnerships contracts; and

• the assumption that the Group will be able
to effectively mitigate risks through enacted
or available actions, as described in the
Principal Risks section of this report.

The sensitivity analysis was performed using
our experience of the 2007 to 2009 period,
adjusted for changes in Countryside’s business
divisions, during which the Housebuilding
sector saw significant reductions in sales rates
and average selling prices and illiquidity in the
land market during a prolonged economic
recession. These assumptions include, inter alia,
a 15% to 25% fall in house prices, up to 60%
reductions in sales rates and 10% build cost
inflation, offset by reductions of up to 75% of
land purchases and up to 30% in headcount.

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It considered all of our principal risks, although
our assumption that we will be able to effectively
mitigate some of our risks leads to a greater
emphasis on those risks that are beyond our
control (such as external macroeconomic factors).

Having had due regard to the sensitivity analysis,
the Directors have concluded that there is a
reasonable expectation that the Company
will be able to continue in operation and meet
its liabilities as they fall due over the period
of the assessment.

Ian Sutcliffe
Group Chief Executive
20 November 2019

Countryside Properties PLC / Annual report 2019 53

Principal risks

Board, Audit Committee and Risk Management
Committee responsibility
The Audit Committee reviewed the Group’s risk
register and the assessment of the Group’s principal
risks and uncertainties prepared by the Risk Management
Committee at its meetings in July and October 2019.
The Audit Committee also considered the effectiveness
of the Group’s systems and has taken this into account
in preparing the Viability Statement on the previous page.

The Audit Committee reported on its findings at the
Board’s July and October 2019 meetings, in order to
support it in making its confirmation that it had carried
out a robust assessment of the principal risks.

Principal risks and uncertainties
The Group’s principal risks are monitored by the Risk
Management Committee, the Audit Committee and
the Board. The graph to the right provides the Group’s
assessment of its principal risks following mitigation.
The table below sets out the Group’s principal risks
and uncertainties and mitigation.

Current assessment of principal risks

t
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Unlikely

Occasional

Likely

Risk – pre- and post-mitigation

Likelihood

Pre-mitigation

Post-mitigation

Pre- and post-mitigation

Risk and impacts

1. Adverse
macroeconomic
conditions*

Responsible Executive:
Group Chief Executive

A decline in macroeconomic
conditions, or conditions in the UK
residential property market, can
reduce the propensity to buy
homes. Higher unemployment,
interest rates and inflation can affect
consumer confidence and reduce
demand for new homes. Constraints
on mortgage availability, or higher
costs of mortgage funding, may
make it more difficult to sell homes.

How we monitor and manage the risk

Impact on strategy

• Funds are allocated between the Housebuilding and

Partnerships businesses.

• In Housebuilding, land is purchased based on planning
prospects, forecast demand and market resilience.

Risk change

• In Partnerships, contracts are phased and, where possible,

subject to viability testing.

• In all cases, forward sales, cash flow and work in progress are

carefully monitored to give the Group time to react to
changing market conditions.

Risk and impacts

2. Adverse changes
to Government
policy and
regulation*

Responsible Executive:
Group Company
Secretary and
General Counsel

Adverse changes to Government
policy in areas such as tax, housing,
the environment and building
regulations may result in increased
costs and/or delays. Failure to
comply with laws and regulations
could expose the Group to penalties
and reputational damage.

How we monitor and manage the risk

Impact on strategy

• The potential impact of changes in Government policy and
new laws and regulations are monitored and communicated
throughout the business.

• Detailed policies and procedures are in place to address the

Risk change

prevailing regulations.

Risk and impacts

How we monitor and manage the risk

Impact on strategy

3. Constraints on
construction
resources*

Responsible Executive:
Chief Executive,
Partnerships North

Costs may increase beyond budget
due to the reduced availability of
skilled labour or shortages of
sub-contractors or building materials
at competitive prices to support
the Group’s growth ambitions.
The Group’s strategic geographic
expansion may be at risk if new
supply chains cannot be established.

54 Annual report 2019 / Countryside Properties PLC

• Optimise use of standard house types and design to

maximise buying power.

• Use of strategic suppliers to leverage volume price reductions

and minimise unforeseen disruption.

• Robust contract terms to control costs.

• Modular panel factory.

Risk change

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Risk and impacts

4. Programme delay
(rising project
complexity)

Responsible Executive:
Chief Executive,
Partnerships South

Failure to secure timely planning
permission on economically viable
terms or poor project forecasting,
unforeseen operational delays due
to technical issues, disputes with
third-party contractors or suppliers,
bad weather or changes in purchaser
requirements may cause delay or
potentially termination of project.

How we monitor and manage the risk

Impact on strategy

• The budgeted programme for each site is approved by the

Divisional Board before acquisition.

• Sites are managed as a portfolio to control overall Group

delivery risk.

• Weekly monitoring at both divisional and Group level.

Risk change

Risk and impacts

How we monitor and manage the risk

Impact on strategy

5. Inability to
source and develop
suitable land

Responsible Executive:
Chief Executive,
Housebuilding

Competition or poor planning may
result in a failure to procure land in
the right location, at the right price
and at the right time.

• A robust land appraisal process ensures each project is

financially viable and consistent with the Group’s strategy.

Risk change

Risk and impacts

How we monitor and manage the risk

Impact on strategy

6. Inability to attract
and retain talented
employees1

Responsible Executive:
Group HR Director

Inability to attract and retain highly
skilled, competent people at all
levels could adversely affect the
Group’s results, prospects and
financial condition.

• Remuneration packages are regularly benchmarked against

industry standards to ensure competitiveness.

• Succession plans are in place for all key roles within the Group.

Risk change

• Exit interviews are used to identify any areas for improvement.

Risk and impacts

How we monitor and manage the risk

Impact on strategy

7. Inadequate health,
safety and
environmental
procedures

Responsible Executive:
Group Company
Secretary and
General Counsel

A deterioration in the Group’s
health, safety and environmental
standards could put the Group’s
employees, contractors or the
general public at risk of injury or
death and could lead to litigation
or penalties or damage the
Group’s reputation.

• Procedures, training and reporting are all carefully monitored

to ensure that high standards are maintained.

• An environmental risk assessment is carried out prior to any

land acquisition.

• Appropriate insurance is in place to cover the risks associated

with housebuilding.

Risk change

Impact on our strategy

Risk change

GROWTH

RETURNS

RESILIENCE

Risk
increased
No
change
Risk
decreased

The Board’s review of risk, including the principal risks, takes into account the
known and forecast developments flowing from plans being made for Brexit.
Brexit affects many of the principal risks, but particularly those marked with
an asterisk.

Countryside Properties PLC / Annual report 2019 55

Chairman’s introduction to governance

COMMITTED TO
GOOD GOVERNANCE

Good corporate governance is vital
to the success of Countryside.

Dear Shareholders,
As Chairman of the Board of Countryside, I would like to
make a personal statement about the importance with
which the Board regards corporate governance. Good
governance is a core discipline that is vital to the success of
the Group and complements our desire to continually
improve upon the success of the Group on our shareholders’
behalf. This report sets out our approach to governance,
explaining how our governance framework supported our
activities throughout the year.

I am very pleased to report that during the year ended
30 September 2019, and as at the date of this report, the
Company has fully applied the main and supporting
principles of the Code issued in 2016 (a copy of which is
available from www.frc.org.uk) (the “2016 Code”).

We have also made significant progress in preparation for
the application of the updated version of the 2016 Code,
and the associated Guidance on Board Effectiveness, that
was published in July 2018 (the “2018 Code”).

Set out below are highlights of the progress we have made
implementing the 2018 Code and our response to other
key governance changes during the reporting period.

Key governance developments during the
reporting period
We have recently written to principal shareholders to seek
feedback on the Company’s proposed new Director’s
Remuneration Policy (“DRP”), the final version of which will
be tabled for shareholder approval at the 2020 AGM.

Full details on the new DRP is set out in the Remuneration
Report on pages 77 to 83, but pertinent here is that it takes
into account the provisions of the 2018 Code.

Principal steps we have taken this year to address other
elements of the 2018 Code and other corporate
governance developments include:

• reviewing and amending all Board and Committee terms
of reference to reflect the requirements of the 2018 Code;

• agreeing the division of responsibilities between the

Chairman, Senior Independent Director and Group Chief
Executive;

• appointing Baroness Morgan (Non-Executive Director) as
the Board “Workforce Engagement Director” to represent
the “voice of the workforce” at Board level;

• strengthening the Group’s Whistleblowing Policy and

reporting procedures (see page 69);

• improving reporting on how we engage with our key

stakeholders and take account of their views in decision
making (see page 91);

• continuing to improve upon the measures we take

across the Group to guard against modern slavery (see
countrysideproperties.com/social-value-sustainability); and

• implementing corporate governance arrangements and
reporting requirements in all Group companies affected
by the The Companies (Miscellaneous Reporting)
Regulations 2018.

56 Annual report 2019 / Countryside Properties PLC

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Other activities in 2019
It has been another busy year for the Board, visiting many
parts of the business and engaging with our principal
shareholders and other key stakeholders. More information
can be found on page 67 (What the Board did in 2018/19).
Some of the other principal areas pertinent to good
governance are set out below.

Health and safety
Given the nature of our business, a continual focus on health
and safety processes is absolutely critical for the safety and
well being of our staff and many contractors who work on
our sites. We describe our approach to health and safety
in detail on page 44, including a description of the metrics by
which we measure our performance in this area. The Board
receives regular reports on health and safety performance
against the agreed KPIs and in November 2019 received a
presentation from the Group Head of Health and Safety.

In November 2018, a tragic incident occurred on one of the
Group’s sites, whereby an operative was struck by moving
plant sustaining fatal injuries. Following this incident, we
undertook a full review of our traffic management procedures
and ran a three-month campaign to raise awareness across
the Group’s sites. The Coroner’s assessment was death by
accident and the Health and Safety Executive have confirmed
no further action will be taken.

Culture, values and ethics
The Board is very aware of the importance of aligning
business strategy with the Company’s culture, values and
ethics and on ensuring that good standards of behaviour
permeate all levels of the organisation to support our
long-term success. For more information on engagement
with employees and other key stakeholders – see page 91.

Meeting our major shareholders
The Company maintains a comprehensive investor relations
programme, designed to ensure that our Executive Directors
meet with investors and analysts regularly, supported when
appropriate by myself and other members of the Board.
We carried out a series of shareholder engagement events
during 2018/19, as outlined below. We again received
positive feedback for each event and see them as a valuable
opportunity to understand the views of our
major shareholders and develop constructive relationships
with them.

Board balance
The Board believes the balance of Executive and independent
Non-Executive Directors remains appropriate having regard to
the size and nature of the business. In addition, the combination
of the experience, diverse backgrounds, length of service and
calibre of the Non-Executive Directors further enhances this
balance and the ability to deliver the Group’s strategy whilst
mitigating against the risk of “group think”.

Full details of the recruitment process can be found on page 73.
The names, responsibilities and other details of each of the
Directors of the Board are set out on pages 58 and 59 with
the composition of the Board on page 62.

Independence of Directors
The Board reviewed the independence of all Non-Executive
Directors (excluding the Chairman) at the Board meeting on
25 July 2019 and determined that they all continue to be
independent. The Board is satisfied that the Chairman was
independent upon appointment and remains independent.

Board and Committee effectiveness
An internally facilitated Board and Committee evaluation was
carried out in 2019. On page 65 we outline the process and
summarise the conclusions and actions. The view of the Board
is that the governance structure, together with the Board and
its Committees, all continue to operate effectively, with a
positive and open culture.

I am satisfied that the Non-Executive Directors continue to
be effective and show a high level of commitment to their roles.
All Directors will, as they will every year, stand for re-election
at the forthcoming Annual General Meeting (“AGM”).

David Howell
Chairman
20 November 2019

Compliance with the Code
From 1 October 2018 until 30 September 2019,
Countryside has complied with all the provisions
of the UK Corporate Governance Code 2016.

Shareholder engagement

November/
December 2018

• Full-year results and roadshow

March 2019

May 2019

July 2019

• Berenberg investor conference

• Peel Hunt investor conference

• Q3 trading update

• Site visits to East London/Midlands

• Interim results and roadshow

January 2019

April 2019

June 2019

September 2019

• AGM/Q1 trading update

• Interim pre-close update and

• Capital Markets Day

• JP Morgan investor conference

conference call

Countryside Properties PLC / Annual report 2019 57

Board of Directors

OUR BOARD OF DIRECTORS

Our Directors bring together considerable experience and expertise.
They are committed to practising and promoting good governance
throughout the Group and delivering strong performance.

David Howell
Non-Executive Chairman

Ian Sutcliffe
Group Chief Executive

Mike Scott
Group Chief Financial Officer

Appointment date1

14 December 2015

19 November 2015

1 October 2018

Career and skills

David joined the Group in April
2014 as a Non-Executive Director
and was appointed Non-Executive
Chairman in January 2015.

Ian joined the Group in October
2013 as Executive Chairman and
was appointed Group Chief
Executive in January 2015.

Mike joined the Group in
December 2014 as Group
Financial Controller and was
appointed Group Chief Financial
Officer on 1 October 2018.

Mike qualified as a
Chartered Accountant with
PricewaterhouseCoopers LLP
in 2002 and has significant
financial experience having
served in a number of senior
financial positions at J Sainsbury
plc prior to joining Countryside.

Ian previously held a number of
senior roles at Shell before being
appointed UK Managing Director
of George Wimpey, subsequently
becoming UK Chief Executive and
a board member of Taylor Wimpey.
He followed this with a similar role
at SEGRO, before becoming Chief
Executive of Keepmoat Limited.

David is a Chartered Accountant
with extensive experience covering
a number of different industry
sectors as either an Executive or
Non-Executive Director. His last
three executive roles were as:
Chairman of Western & Oriental
plc; Chief Financial Officer and a
member of the board of
lastminute.com plc; and Group
Finance Director of First Choice
Holidays plc. He was also a
Non-Executive Director of The
Berkeley Group Holdings PLC for
over ten years where he chaired
the Audit Committee until 2014.

David is Non-Executive Chairman
of Confidential Incident Reporting
& Analysis Service Limited. He is
also a Non-Executive Chairman
of Lioncor Development Ltd.

External appointments

Nil.

Following his resignation as a
Non-Executive Director of
Ashtead Group plc on 2 January
2019, Ian joined the board of
Pegasus Life Limited as a
Non-Executive Director on
25 February 2019. Ian stepped
down from the board of
Pegasus Life Limited on
30 September 2019.

Committee membership

1. Appointment date is the date of appointment as a Director of Countryside Properties PLC. Appointments to the Group prior to this date refer to Copthorn Holdings Limited, the ultimate parent company of

the Group at the time.

58 Annual report 2019 / Countryside Properties PLC

Audit Committee

Nomination Committee

Remuneration Committee

Executive Committee

Chair

G
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Amanda Burton
Independent Non-Executive
Director

Douglas Hurt
Senior Independent
Non-Executive Director

Baroness Morgan
of Huyton
Independent Non-Executive
Director

Simon Townsend
Independent Non-Executive
Director

17 December 2015

1 January 2018

17 December 2015

1 March 2019

Amanda joined the Group in
October 2014 as a Non-
Executive Director.

Amanda joined Clifford Chance LLP
in 2000, leaving in December 2014
as its Global Chief Operating Officer.
Prior to this, she was at Meyer
International PLC where she
was a Director and Chairman
of its Timber Group. She also
served nine years on the board
at Galliford Try plc, as a
Non-Executive Director from
2005 and as Senior Independent
Director from 2008.

Douglas joined the Group on
1 January 2018 as a Non-Executive
Director, Chair of the Audit
Committee and Senior Independent
Director of the Company.

Douglas is a Chartered
Accountant and has significant
financial experience, having served
from 2006 to 2015 as Finance
Director of IMI plc, the global
engineering group. Prior to this,
he held a number of senior
finance and general management
positions at GlaxoSmithKline plc,
which he joined in 1983,
having worked previously
at Price Waterhouse.

Amanda is Senior Independent
Director of HSS Hire Group plc,
a Non-Executive Director of
Skipton Building Society and
Connells Limited and Chair and
Trustee of Battersea Dogs and
Cats Home.

Douglas is Senior Independent
Director and Chair of the Audit
Committee of Vesuvius PLC.
He is also a Non-Executive
Director and Chair of the Audit
Committee of BSI Group.

Baroness Morgan joined the
Group in October 2014 as a
Non-Executive Director.

Baroness Morgan had a long and
successful career in Central
Government, serving as Director
of Government Relations at
10 Downing Street from 2001
to 2005. Prior to this, she was
Political Secretary to the Prime
Minister from 1997 to 2001. She
was appointed Minister for
Women and Equalities in 2001,
being made a life peer in the same
year. She previously served as a
board member for the Olympic
Delivery Authority, as Chair of
Ofsted and as a member of
the advisory committee of Virgin
Group Holdings Limited.

Baroness Morgan is Master of
Fitzwilliam College, Cambridge,
Chairman of Royal Brompton and
Harefield NHS Trust, an advisor
to the board of the children’s
charity ARK and a trustee of a
number of charities.

Simon joined the Group on
1 March 2019 as a Non-Executive
Director. He became a member
of the Audit, Remuneration and
Nomination Committees on
10 May 2019.

Simon has extensive experience
in the UK hospitality industry,
having worked for over 30 years
in various sales, marketing,
commercial and operational roles,
previously with Whitbread PLC,
Allied Domecq PLC, The Rank
Group Plc and Marston,
Thompson & Evershed PLC.

Simon is Chief Executive Officer
of Ei Group plc. He is also Vice
Chairman of the British Beer &
Pub Association and a member of
the advisory board of Women in
Hospitality, Travel & Leisure 2020.

N R

Countryside Properties PLC / Annual report 2019 59

Executive Committee

Ian Sutcliffe
Group Chief Executive

Mike Scott
Group Chief Financial Officer

Full biography on page 58.

Ian Kelley
Chief Executive,
Partnerships North

Ian was appointed Chief Executive of
Partnerships North on 2 May 2017.

Ian joined the Group on 12 August
1996 as Associate Director for
Business Development prior to
his appointment as Managing
Director of the Partnerships
North division in October 2000.

He previously worked for
Wimpey Homes for a significant
period of his career in both
open-market housing and urban
regeneration. This was followed
by a two-year period with
Lovell Partnerships in a role
developing new business.

Phillip Lyons
Chief Executive, Housebuilding

Phillip joined the Group as
Chief Executive of Housebuilding
on 2 May 2017.

Having trained as a quantity
surveyor, Phillip was previously
at Taylor Wimpey where he
was most recently the Divisional
Managing Director, London and
South East. He has over 30 years’
industry experience and is
responsible for all the Group’s
housebuilding and strategic land
activities, including Millgate.

lain McPherson
Chief Executive,
Partnerships South

Gary Whitaker
General Counsel and
Company Secretary

Nick Worrall
Group HR Director

Nick joined the Group as Group
HR Director in September 2014.

Nick previously held senior HR
positions for over 20 years in the
retail, energy and financial services
industries. Immediately prior
to joining the Group, he was
HR Director for BrightHouse.

lain was appointed Chief
Executive of Partnerships South
on 1 November 2018.

Gary was appointed General
Counsel and Company Secretary
on 19 November 2015.

Iain joined the Group in September
2014 as the Managing Director
of the Southern region of the
Housebuilding division. Iain has
worked in the housing sector
in London and the South East
in various roles over the last
23 years. He originally worked for
local Government in what is now
known as Homes England before
moving to join Hyde Housing
Association in his first development
role. He then moved into private
housing by joining Crest Nicholson
in 2008 where he was promoted
to Managing Director.

Gary joined the Group in March
2015 having previously been the
General Counsel and Company
Secretary for 15 years at
Xchanging plc, which specialised
in technology and outsourcing.
He trained as a solicitor with
Norton Rose, and qualified into
the corporate finance team,
working in its London and
Moscow offices. Prior to Norton
Rose, he served an 11-year
commission in the Royal Navy
Fleet Air Arm.

60 Annual report 2019 / Countryside Properties PLC

The Countryside Board and
Executive Committee are committed to
ensuring that high standards of
corporate governance are reflected
across the business.”

David Howell
Chairman

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Modular panel factory board visit

Countryside Properties PLC / Annual report 2019 61

Corporate governance report

GOVERNANCE
IN ACTION

The Board is responsible for maintaining a strong and
effective system of governance throughout the Group.

The role of the Board
and its Committees
The Board is collectively responsible for leading
and directing the Group. It sets our corporate
strategy, key policies and objectives, and the values
and culture to achieve the long-term sustainability
of the business, for the benefit of shareholders,
customers, suppliers and communities in which
we operate. The Board also reviews and monitors
the key risks the Company faces, the risk appetite
of the Company and the processes in operation
to mitigate these. In discharging its responsibilities,
the Board is supported by its management and
specialist committees. Details on the role of
the Board and its Committees can be found on
pages 62 and 63. Each Committee works from
terms of reference which are reviewed annually
and are available on the Company’s website:
investors.countrysideproperties.com. The most
recent revision to the terms of reference for
each Committee reflected substantial changes
to give effect to the revised UK Corporate
Governance Code 2018. They were reviewed
and approved by the Board on 25 July 2019.

Additional information
The Directors’ Report (see pages 91 to 93),
which forms part of this Corporate Governance
Report, includes information on the impact
on the Company as required by the Takeover
Directive, and information required under
the Disclosure and Transparency Rules.

Board composition
On 30 September 2019, the Board consisted
of seven Directors, being a Non-Executive
Chairman, two Executive Directors and
four independent Non-Executive Directors.
Douglas Hurt is the Senior Independent Director.

Board changes during the year are set out on
page 91.

The Board has recruited Non-Executive Directors
of a high calibre with broad commercial and other
relevant experience. They are expected to bring
objectivity and independence of view to the
Board’s discussions, and to help provide the
Board with effective leadership relating to the
Company’s strategy, performance, risk and
people management while ensuring high standards
of financial probity and corporate governance.
Countryside believes that the Board has the
appropriate balance of skills, experience,
independence and knowledge of the Group
to support the Company’s long-term success.

62 Annual report 2019 / Countryside Properties PLC

Summary of matters reserved
for the Board
The Board has a formal schedule of matters
that are reserved for its decision. This includes
the approval of half-year and full-year financial
statements, changes to the Company’s capital
structure and any significant investments,
contracts, acquisitions, mergers and disposals.
The Board last reviewed these reserved
matters on 9 October 2019. Other specific
responsibilities are delegated to the Board
Committees, which operate within clearly
defined terms of reference.

Full details of the schedule of matters reserved
for decision by the Board and the responsibilities
delegated to the Board Committees are
on the Group’s website at investors.
countrysideproperties.com.

The roles of the Chairman, the
Group Chief Executive and the
Senior Independent Non-Executive
Director
The roles of the Chairman, the Group Chief
Executive and the Senior Independent
Non-Executive Director are clearly segregated.
The division of responsibilities between them is
set out in writing and was agreed by the Board
on 9 October 2019. See pages 62 and 63 for
full details of the roles and responsibilities of
the Directors and the Company Secretary.

Directors’ inductions, training
and development
Countryside has a structured induction
programme that is tailored for all newly appointed
Directors. This includes, where appropriate,
meetings with members of the Executive
Committee and visits to the business divisions
and their respective management teams in each
of Countryside’s business sectors. During the
financial year under review, the Company has
completed the induction of Simon Townsend
to the role of Non-Executive Director.

All Directors receive ongoing updates on the
Company’s projects and activities and on legal
and regulatory changes. In 2019 these included
briefings on the Government reform of building
safety regulations, the Company’s IT strategy,
the new UK Corporate Governance Code for
financial years starting after 1 January 2019,
plans for leasehold reform, modern methods
of construction and customer service.

The Board
Responsible for the overall conduct
of the Group’s business including our
long-term success; setting our values,
standards and strategic objectives;
reviewing our performance; and
ensuring a regular dialogue with
our shareholders.

Read more on pages 74 to 90

Risk Management
Committee

Health, Safety,
Environment and
Quality Committee

Executive
Committee

Role and responsibilities

• Monitoring and assessing the

effectiveness of the Group’s risk
and control processes

• Determining the policy, objectives and
targets for the Group’s health and
safety compliance and performance

• Co-ordinating the implementation
by management of Group policies
on risk and control

• Ensuring adequate training and
communication to achieve the
Group’s health and safety objectives

• Overseeing the administration of

the Group’s insurance arrangements,
providing assurance to the Audit
Committee that the Group’s
internal control systems are being
monitored and assessed

• Determining the policy, objectives
and targets for the Group’s quality
and environmental compliance
and performance

• Ensuring adequate training

and communication to achieve
the Group’s quality and
environmental objectives

• Identifying operational and

strategic risks

• Responsible for the ownership
and control of specific risks

• Establishing and managing the
implementation of appropriate
action plans

• Supporting the Chief Executive
in implementing the strategy

Countryside Properties PLC / Annual report 2019 63

Corporate governance report continued

Board and Committee attendance
The number of Board and Committee meetings attended by each Director during the 2019 financial year was as follows:

Number of meetings held

David Howell

Ian Sutcliffe

Rebecca Worthington1

Mike Scott

Amanda Burton

Baroness Morgan

Douglas Hurt

Simon Townsend2,3

Board

9/9

5/5

9/9

3/4

Audit
Committee

Remuneration
Committee

Nomination
Committee

Overall
attended

—

4/4

1/1

7/7

—

7/7

2/2

5/5

—

5/5

2/2

100%

89%

1. Rebecca Worthington resigned as a Director of the Company on 17 April 2019. The attendance table above reflects her period of office.

2. Simon Townsend was appointed a Director of the Company on 1 March 2019 and a member of the Audit, Remuneration and Nomination Committees on 10 May 2019. The attendance table above reflects his

period of office as a member of the Board and the Committees.

3. Simon Townsend was unable to attend one Board meeting which had been scheduled before his appointment due to prior commitments.

Board analysis (as at 30 September 2019)

Composition

Length of tenure

Gender diversity

2914+

7157+
29+

Non-Executive
Chairman 1

Non-Executives 4

Executives 2

>3 years 4

<1 year 2

>1 year 1

Female 29%

Male 71%

The role of the Board
and its Committees continued
Directors’ inductions, training
and development continued
Directors receive formal papers before each Board meeting,
which enable them to make informed decisions on the
issues under consideration. In addition to formal Board
meetings, the Chairman maintained regular contact with the
Group Chief Executive, the Group Chief Financial Officer
and other senior executive management during 2019 to
discuss specific issues. The Company Secretary acts as an
advisor to the Board on matters concerning governance and
ensures compliance with Board procedures. All Directors
had access to the Company Secretary’s advice, which was
sought from time to time during 2019. Directors may also
take independent professional advice at the Company’s
expense. In the event that any Director has concerns about
the running of the Company, or a proposed action that
cannot be resolved within the Board forum, these may be
reflected in the Board minutes. The Company Secretary
circulates minutes of each Board meeting following the
meeting to allow such comments to be raised.

64 Annual report 2019 / Countryside Properties PLC

Simon Townsend and Mike Scott

Induction programme for Simon Townsend
The timing of Simon joining the Board on 1 March 2019 enabled him
to join the Board strategy away day on 21 March 2019, which gave
him an overview of the Group, its operations, talent and longer-term
business objectives. As well as introductory meetings with the Group
Chief Executive, Group Chief Financial Officer and Company Secretary,
Simon met with each of the Divisional CEOs (to learn more about
their businesses and senior management teams) and the Group Head
of Human Resources. Following these meetings, various site visits with
the responsible Divisional CEO and his management team have been
organised. Simon joined the Board on a visit to the Warrington modular
build factory in June 2019, which included a tour of the factory.

14
+
29
+
57
Review of Board effectiveness
Following an externally facilitated review of Board and Committee
effectiveness last year, by Claire Howard Consultancies, this year’s review
has been led by the Chairman, supported by the Company Secretary.
The process started with preparatory questionnaires to identify any
potential areas that the review might focus on. A one-to-one meeting
was then held with each of the Directors and the Company Secretary,
during which Board members were invited to evaluate and comment
on the operation of the Board and its Committees. The Chairman met
with the Company Secretary to discuss the results of the exercise.

The Non-Executive Directors (without the Chairman) met with Douglas Hurt,
as Senior Independent Non-Executive Director, to review the performance of

David Howell during 2019. Douglas Hurt later debriefed the Chairman.
David Howell reviewed the performance of each of the Non-Executive
Directors during 2019, taking into account the views of the other Directors.

The principal issues raised in the 2019 performance evaluation were
discussed at the 12 September 2019 Board meeting and the
12 September 2019 Nomination Committee meeting.

A list of specific actions was agreed to address the comments made
by Directors, including the continued improvement of succession plans
for senior management, the need to allow more time for the Board to
meet with management and staff on site and office visits and to formalise
the process for the co-ordination of Board agendas between the
Chairman, the Company Secretary and executive management.

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Board and Committee evaluation: principal actions and progress

2018 evaluation –
recommendations included

Devote additional Board time
to strategy.

Actions taken during 2018/19

The Board holds a “strategy away day” in March each year and spends significant time reviewing strategic topics.
Following the 2018 evaluation, a principal recommendation was for improvements to the structure and content
of the March Strategy Day, and a more focused schedule of follow-up actions, to be reviewed at each Board
meeting. This process was managed through the Board’s “rolling agenda” which is tabled at each meeting.

Additional focus on succession
planning for Executive Directors
and Non-Executive Directors.

This continued to be an area of focus for the Nomination Committee and the Board during 2018, with detailed
reviews of progress and consideration of alternative plans going forward, conducted at each of the Committee’s
meetings during 2018.

2019 evaluation –
recommendations included

Actions taken to date

Improving focus on monitoring in
implementation of the strategy.

The March 2019 Board strategy away day was structured to take account of the recommendations of the 2018
Board evaluation report. The Company’s strategic objectives were agreed and a report of progress against each
of the follow-up actions was reviewed at each Board meeting. During 2019, the Board has closely monitored
delivery of the strategy.

Refining succession planning for the
Executive and Non-Executive Directors.

The Nomination Committee has spent considerable time during 2019 identifying candidates and developing
succession plans for the Executive Directors and planning a sequenced succession for the Board’s
Non-Executive Directors.

Tenure, election and re-appointment
of Directors
All Non-Executive Directors, excluding the Chairman,
Douglas Hurt and Simon Townsend, had their three-year
appointment from 17 December 2015 extended for a
further three-year period to 16 December 2021. The
Chairman’s three-year appointment from 14 December 2015
was also extended for a further three-year period to
13 December 2021. The three-year appointments of
Douglas Hurt and Simon Townsend commenced on
1 January 2018 and 1 March 2019 respectively.

The Board, having reviewed the findings of the 2019 Board
and Committee evaluation, approved the re-appointment
of the Chairman and the Non-Executive Directors, in
their current roles. With regard to the re-appointment
of David Howell as Non-Executive Chairman, the Board
also considered the feedback from Douglas Hurt (as Senior
Independent Director), following his private meeting with
the Executive Directors and Amanda Burton, Baroness
Morgan and Simon Townsend to review the performance
of the Chairman during 2019.

All Non-Executive Director appointments may be
terminated by either party upon three months’ (or in
the case of David Howell, six months’) written notice, or
by shareholder vote at the AGM. The Non-Executive
Directors do not have any entitlement to compensation
if their office is terminated. Full details of the remuneration
of the Non-Executive Directors are on page 84 of this
document in the Directors’ Remuneration Report.

Under the Articles of Association, all Directors are subject
to re-election at the AGM at intervals of no more than
three years. Ian Sutcliffe will step down from the Board on
31 December 2019 and so will not stand for re-election.
Both Simon Townsend and Iain McPherson will be put
forward for election by shareholders at the 2020 AGM.
In line with the 2018 code, all other Directors will be put
forward for re-election at the 2020 AGM. The Board
believes that each of the Directors make a valuable
contribution to Countryside and supports their election
and re-election in each case.

Countryside Properties PLC / Annual report 2019 65

Corporate governance report continued

The role of the Board
and its Committees continued
Directors’ interests
Under Countryside’s Articles of Association, the Board may
authorise any actual or potential conflicts of interest for
Directors. Each Director provides the Company Secretary
with information about any actual or potential interests that
may conflict with those of Countryside. These might include
other directorships and any other potential interests that
each think may cause a conflict requiring prior Board
authorisation. If the circumstances of any of these disclosed
interests change, the relevant Director must update the
Company Secretary promptly. The register setting out each
Director’s current disclosures (where relevant) was last
reviewed and approved by the Board at its meeting on
9 October 2019. In each such situation, the Director under
consideration did not vote on the matter. The Board will
continue to review the register of interests regularly to
ensure that the authorisations, and any conditions attached
to them, are appropriate for the relevant matter to remain
authorised. The Company Secretary maintains a list of all
authorisations granted to Directors, setting out the date
of authorisation, its expiry and scope and any limitations
imposed (as applicable).

Board diversity
The Board continues to recognise that diversity, in all its
dimensions, across an organisation, including at Board level,
is important to support innovation, strategic development
and operational efficiency. The Board Diversity Policy is
reviewed annually, most recently at the 19 November 2019
Board meeting.

The Board takes very seriously its responsibility to comply
with the recommendations of the Davies Report (as built
on by the Hampton-Alexander Review), encouraging
increased participation by women on boards, and of the
Parker Review and its Report into the Ethnic Diversity of
Boards. The proportion of women on the Countryside
Board, which was two out of seven, is currently 29%.

It is the Board’s policy to recruit Board members based on
skills and experience. The Board will keep its balance and
composition under regular review and when so doing will
take into account the recommendations of the above reports.

For details on Countryside’s broader policy on diversity
across the Group, please refer to the Our People section,
on pages 38 to 40.

Board site visits
During 2019, the Board visited two different development
sites (as outlined on page 67).

66 Annual report 2019 / Countryside Properties PLC

Board visit to modular panel factory
In June 2019 the Board visited Countryside’s new modular
panel factory, based in Warrington. The factory commenced
production in April 2019 and will enable Countryside to reduce
reliance on sub-contract labour, help secure the supply chain and
improve on site efficiencies. It is an example of the Company’s plans
to actively seek out innovation in a progressive manner. The Board
received a presentation by management of the factory’s processes
and impact on the supply chain. The Board then toured the factory
to meet staff and view the production and distribution process. A
Board meeting was later held at Countryside’s Warrington office.

Major shareholders as at 15 November 2019

1. Standard Life Aberdeen

2. Aviva Investors Global Services Ltd

3. M&G Investment Management Ltd

4. Ruffer LLP

5. Invesco Ltd

15.50%

10.67%

7.00%

5.59%

5.28%

WHAT THE BOARD
DID IN 2018/19

During the year ended 30 September 2019, significant discussions,
transactions and appointments approved by the Board, other
than the scheduled matters outlined on page 62, included:

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October 2018

• Appointment of Rebecca

Worthington to Group Chief
Operating Officer

• Appointment of Mike Scott to
Group Chief Financial Officer

• Review of health and
safety performance

• Review of anti-slavery procedures

and planned improvements

• Approval of Employee Benefit
Trust share purchase to satisfy
share plan vesting

January 2019

• Annual General Meeting

• Customer service presentation

• Cladding fire risk review

• Approval of revised share
award settlement policy

2018

February 2019

• Partnerships South site visit

• Presentation on Smart Cities

• Appointment of Simon Townsend

as a Non-Executive Director

• Review of gender pay reporting

June 2019

• Partnerships North visit (including

the modular frame factory)

• Post-investment site reviews

Rochester Riverside

Abbotsfield

September 2019

• Review of 2020 Budget

• Review of Board and
Committee evaluation

• Approve renewal of annual

Group insurance programme

2019

March 2019

• Review of the homebuilding
market, product, risk and
Group strategy

November 2018

• Approval of 2018 year-end results

and final dividend

• Approval of 2019 Budget

• Convene Annual General Meeting

• Corporate governance review

of policies and Committee terms
of reference

May 2019

• Review of five-year forecast

• Approval of revised dividend policy

• Approval of 2019 interim results

• Presentation by Group Chief
Information Officer of IT
transformation project

• Cladding fire risk update

July 2019

• Approve five-year forecast

• Review of Group risk register and

review of principal risks

• Approve Group insurance renewal

principles and process

• Approve Health and Safety Policy

revisions to comply with ISO 45001

Newhall

Acton Gardens

Hanbury Place

Countryside Properties PLC / Annual report 2019 67

Report of the Audit Committee

AUDIT COMM IT TE E
Committee Chair
Douglas Hurt

Other members
Amanda Burton
Baroness Morgan
Simon Townsend (from 10 May 2019)

Meetings held
4

Role and responsibilities of the
Audit Committee
• Monitoring the integrity of the Group’s financial

statements and formal announcements

• Reviewing significant accounting and

reporting judgements

• Monitoring and reviewing the effectiveness

of the Group’s Internal Audit function

• Making recommendations in relation to the
appointment, re-appointment and removal
of the external auditor

• Monitoring and reviewing the effectiveness

of the Group’s external audit

• Monitoring auditor independence

• Developing and implementing policy on non-audit

services provided by the external auditor

• Monitoring the Group’s risk management

framework and key internal controls

• Reviewing the Group’s procedures for detecting

and preventing fraud, bribery and the governance
of anti-money laundering systems and controls

The Committee’s terms of reference
are on Countryside’s website at:
investors.countrysideproperties.com/governance.

Areas of focus in 2019
• Reviewing the key judgements and estimates

relating to the Group’s interim and full-year results

• Reviewing and challenging of the impact of the

adoption of new accounting standards

• Reviewing of the organisation and management

of the Internal Audit function

• Reviewing of the investigation into project
accounting in the Partnerships division
(Manchester region) and challenging with the
external auditor the appropriate accounting
for the resultant £7.4m inventory impairment
(see “Inventory impairment” in “Areas
of significant judgement” below and Note 7
in the Group’s 2019 Half-Year Accounts)

• Considering the presentation of

non-underlying items

• Considering various matters in relation

to the acquisition of Westleigh

• Scrutinising the forecasts and sensitivity analyses

underlying the Group’s Viability Statement

• Considering applicable taxation and

accounting matters

68 Annual report 2019 / Countryside Properties PLC

Dear Shareholders,
During the year, the Committee continued in its oversight role on behalf of the Board,
protecting the interests of shareholders by monitoring the Group’s internal control
framework, financial management and the integrity of published financial information.
It also monitored the effectiveness of the internal and external audit processes.

The Committee set the scope of internal audit activity for the 2019 financial year and
reviewed the findings of audits performed during the year. In order to strengthen and
improve the quality of internal audit and oversight of the risk assurance function, the
Company has appointed a Director of Audit and Risk Assurance. This Director will
assume leadership of the internal audit function from 1 October 2019 and lead both
an internal team and call upon external support to supplement capacity as the team
is built up, or as required for specialist technical assistance.

The Committee ensured that management has implemented all recommendations
for internal control improvements on a timely basis. The Committee continues to
monitor the integrity of the Group’s financial statements, including the key judgements
and estimates made by management. It also scrutinised the scope, performance and
effectiveness of the external audit process.

In addition, management and the internal and external auditors provided the Committee
with a number of complementary reports. The Committee met both the internal and
external auditors regularly without management being present. I have also discussed
various matters with the Group Chief Financial Officer and Company Secretary in
relation to issues relevant to the Committee’s work.

Douglas Hurt
Chair of the Audit Committee
20 November 2019

Committee attendance
The number of Committee meetings attended by each member during the 2019
financial year was as follows:

Number of meetings held

Douglas Hurt

Amanda Burton

Baroness Morgan

Simon Townsend¹

1. The table above covers attendance during their period of office.

Audit
Committee

Overall
attendance

4/4

1/1

100%

Composition
During 2019, the composition of the Committee
complied with the Code. Throughout the period
it has comprised at least three independent
Non-Executive Directors: Douglas Hurt,
Amanda Burton and Baroness Morgan, with
the addition of Simon Townsend, following his
appointment to the Committee on 10 May 2019.
The Board considers Douglas Hurt, the
Chairman, to have recent and relevant financial
experience of working with financial and
accounting matters. The Committee maintains
a formal agenda for each year to ensure it
complies with the requirements of the Code.
It met four times during the year.

We set out details of attendance at the
Committee meetings during the 2019 financial
year on page 68.

Internal controls
The Committee assisted the Board by regularly
reviewing the operation and effectiveness of the
Group’s internal controls. The internal control
system is designed to manage, rather than
eliminate, the risk of failure to achieve business
objectives. It can only provide reasonable, and
not absolute, assurance against material errors,
losses or fraud. The Committee also provides
assurance to the Board that appropriate
systems are in place to identify, assess and
manage key risks.

We monitor and maintain the financial
reporting process and control system (including
the preparation of the consolidated financial
statements) through internal control frameworks.
These address key financial reporting risks,
including risks arising from changes in the
business or accounting standards. We use
self-certification and independent testing of
the controls to assess effectiveness.

Whistleblowing
The Group’s whistleblowing processes have been
thoroughly reviewed during 2019, supported by
the appointment of a new independent external
service provider. An awareness programme
was implemented to educate and inform all
Countryside employees and sub-contractors of
the whistleblowing facilities and the confidential
treatment of any information provided. All cases
of whistleblowing are appropriately investigated,
with the results reported to the Committee.
Having reviewed the whistleblowing procedures
across the Countryside Group, the Committee
is satisfied that the policy and its administration
remain effective.

Risk management
The successful management of risk is critical
to achieving Countryside’s strategic objectives.
The Board has delegated responsibility for
reviewing and maintaining effective internal
control over risk management systems and

internal financial controls to the Committee.
Day-to-day management of the Group’s risk
management framework has in turn been
delegated to the Risk Management Committee.
The Group’s management of risk and the role
and membership of the Risk Management
Committee are detailed on pages 51 to 53.

At each Risk Management Committee meeting
management discusses the key risks and its
mitigating action plans. Any changes to the
Group’s risk register are in turn presented for
review by the Committee. The Committee has
monitored the Group’s risk management and
internal control systems throughout the year
and reviews the entire Group risk register
annually, with the last review occurring on
25 July 2019.

In managing risk, the Committee analyses the
nature and extent of risks and considers their
likelihood and impact, both on an inherent and
a residual basis, after taking account of mitigating
controls. This enables the Committee to
determine how we should manage each risk
to achieve our strategic objectives.

The Group’s key risk management procedures
have been in place throughout 2019 and up
to the date of approval of this Annual Report.

During August 2019, KPMG carried out an
internal audit of the Group’s risk management
processes and procedures. Its report was
presented to the Committee at its meeting on
3 October 2019, where recommended actions
were agreed.

Overview of the risk
management process
Internal control
The Group’s key internal control
procedures include:

• a review of the Group’s strategy and the
performance of principal subsidiaries.
This involves a comprehensive system of
reporting based on variances to annual
budgets, key performance indicators and
regular forecasting;

• clearly defined procedures for the approval,

set-up and running of joint ventures;

• a quarterly business review for each business
division. This covers financial performance, a
detailed range of strategic risks, opportunities
and KPI metrics which measure the overall
performance of the business sector. This
process also identifies key operational
issues and the actions required to address
any deficiencies;

• well-defined Group policies and processes,
communicated through the Group Financial
Reporting Procedures Manual and the intranet;

• a defined process governing the approval of

capital expenditure;

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• a defined organisational structure with

appropriate delegation of authority across
all levels of the organisation;

• formal authorisation procedures for all
investments, with clear guidelines on
appraisal techniques and success criteria; and

• formal authorisation procedures for all

significant contracts, including land purchases
and sales, with clear guidelines on success
criteria and contracting practices.

On behalf of the Board, the Committee has
conducted an annual review of the effectiveness
of the Group’s internal control systems for
2019 and the period prior to approval of this
Annual Report.

The Committee Chair reported its findings
to the Board at the 9 October 2019 Board
meeting. The review considered all material
controls in accordance with Financial Reporting
Council guidance. Following this review, no
significant weaknesses or failings were identified.
Management is addressing noted improvement
areas. The Board and the Committee will
continue to monitor and review the internal
control environment.

Fair, balanced and
understandable
At the request of the Board, the Committee
considered whether the 2019 Annual Report
was fair, balanced and understandable and
whether it provided the necessary information
for shareholders to assess the Group’s
performance, business model and strategy.
The Committee took into account its own
knowledge of the Group, its strategy and
performance during the year. Further
comprehensive reviews were undertaken
at different levels in the Group to ensure
consistency and overall balance. The
Committee also took into account a similar
detailed review undertaken by senior
management and the results of the
external audit.

Before the publication of both the interim and
full-year results for the Group, the Committee
undertook a detailed assessment of the
appropriateness of the Group’s use of the
going concern basis in preparing the financial
statements. For further information about
going concern, please refer to the Directors’
Report on pages 91 to 93.

Shortly before publication of the full-year
financial results for 2019, the Committee
undertook a detailed assessment of the
Viability Statement. It recommended to the
Board that the Directors can have a reasonable
expectation that the Company will be able to
continue in operation and meet its liabilities as
they fall due over the three-year period of their
assessment. For the detailed Viability Statement,
please refer to our Risk section on page 53 of
the Strategic Report.

Countryside Properties PLC / Annual report 2019 69

Report of the Audit Committee continued

Internal audit
The work performed by KPMG, which carried
out internal audit services throughout the year,
focused on areas of greatest risk to the Group.
These included those matters identified through
the risk management framework and any
significant change projects occurring within the
business. As stated above, from 1 October 2019,
the Director of Audit and Risk Assurance will lead
a “hybrid” model, whereby internal audit services
will be provided through a combination of
internal resources and external specialist support.

The objective of internal audit is to give the
Committee independent assurance over
financial, operational and compliance controls,
and to assist the Committee in assessing the
effectiveness of internal controls. The Director
of Audit and Risk Assurance reports to the
Group Chief Financial Officer but has independent
access to the Group Audit Committee Chair.

The Executive Committee and the Committee
review all significant internal audit reports, and
all reports are made available to the external
auditor. During the year, the Committee
approved the internal audit plan, reviewed
the findings from audits and monitored the
follow-up of actions identified in those audits.

Oversight of the external audit
Following a tender process,
PricewaterhouseCoopers LLP (“PwC”)
was appointed as external auditor in 2016 and
its appointment was approved by shareholders
at the 2018 AGM. The Company plans to
re-tender the Group audit no later than for
the year ending 30 September 2022. Given
their length of tenure to date, we do not intend
to invite PwC to participate in the re-tender.

The Committee’s oversight of the external
audit includes reviewing and approving the
annual audit plan and planned procedures for
the Half Year Report. In reviewing the plans,
the Committee discusses and challenges the
auditor’s assessment of materiality and those
financial reporting risk areas most likely to give
rise to material error.

PwC has confirmed to the Committee its
independence in accordance with ethical
standards and that it has maintained
appropriate internal safeguards to ensure
its independence and objectivity.

The Committee assesses the effectiveness
of the external audit process annually with
the auditor and the Group’s management.
Regular private meetings are held between
the Committee and PwC without management
present to discuss the auditor’s assessment of
business risks and management’s activities with
regard to those risks, the transparency and
openness of interactions with management and
confirmation that there has been no restriction
in scope placed on them.

70 Annual report 2019 / Countryside Properties PLC

Non-audit services policy
The total of non-audit fees paid to PwC during the year is set out in the table opposite. PwC
undertook its standard independence procedures in relation to each of these assignments to maintain
its independence and objectivity. The Committee received a report at each meeting describing the
extent of the services provided by PwC.

The award of non-audit services to the Group’s external auditor is subject to controls (agreed by
the Committee) to monitor and maintain its objectivity and independence. In order to comply with
the Ethical Standard for Auditors, the Committee considered and re-approved the Group’s policy
for auditor independence and the provision of non-audit services at its meetings on 7 May 2019
and 3 October 2019 respectively.

The policy provides details of permitted, prohibited and audit-related services in accordance with
the Ethical Standard. Prohibited services include among others those relating to taxation, internal
audit, the design or implementation of internal controls and HR services. The Group Chief Financial
Officer holds authority to approve permitted non-audit services, where the services are considered
to be clearly trivial (defined as those with a fee of less than £50,000). Where the services are not
clearly trivial, or where the cumulative fee in the financial year exceeds £100,000, pre-approval is
required from the Committee. Fees for non-audit services are capped at 70% of the average audit
fee for the last three financial years.

Annual evaluation of Audit Committee performance
As part of the broader evaluation process, the Committee reviewed its effectiveness during 2019.
This considered areas including:

• its composition;

• its effectiveness in reviewing the work of the internal and external auditors;

• its effectiveness in reviewing the Group’s internal control systems;

• the quality of reporting; and

• the management of risk.

No significant issues were raised and the Committee concluded that it continues to operate effectively.

During the year the Group obtained the following services from the Group’s auditor:

Fees payable to the Group’s auditor and its associates
for the audit of parent and consolidated financial statements

Fees payable to the Group’s auditor and its associates for other services:

– Audit of subsidiary companies

– Audit of joint ventures

– Audit-related services

2019
£m

2018
£m

0.2

0.3

0.1

0.7

0.1

0.2

0.1

0.5

B USI NE SS CO NT INUI TY P LA N N I N G
“ Testing the Group’s organisation and procedures to
cope with any potential disruption to restore normal
services in a minimum timeframe has been a key
objective in 2019.”

During 2019, as part of the review of the Group’s business continuity planning, a particular
focus was placed on the processes and procedures in place for the new modular build factory
given its importance. Based in Warrington, the factory will ultimately produce panel walls for
around 1,500 homes per year. A thorough review of the factory’s resilience to all forms of
disruption has been carried out with the help of Willis Towers Watson risk advisors and
tested by KPMG through the annual internal audit programme. All recommendations
identified by KPMG are being implemented and monitored by the Audit Committee.

Areas of significant judgement considered by the Audit Committee in 2019

The Committee considered the following matters in respect of the Group’s financial statements, based upon its interaction with management
and the external auditor during the year.

Significant matters considered

Our response to these matters

Inventory impairment
In the first half of the year, cost overrun issues were identified in the Group’s
Manchester region within the Partnerships division. A detailed internal review was
undertaken by management, which concluded that the controls in place were not
operating as intended and costs accrued over a four-year period had not been
appropriately recognised in the consolidated statement of comprehensive income.

The Audit Committee reviewed and challenged both
management’s approach to the issue and the findings of the
Deloitte LLP report. The Audit Committee is satisfied that,
following these reviews and the enhancement to internal controls
implemented by management, appropriate corrective action has
been taken on this issue.

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Following the review, management has taken steps to enhance the internal
controls that are in place and disciplinary action was taken against the
members of staff involved, none of whom remain employed by the Group.

Deloitte LLP were appointed to perform a full investigation of the issue. Their
report substantiated the work by management and confirmed the magnitude
of the adjustments required.

Additional audit procedures were performed by PwC in this area to verify that
this was isolated to the Manchester region and that the forecast costs to
complete had been appropriately reflected at year-end.

The Audit Committee agreed that the costs relating to
overstated inventory valuation should be included in the FY19
half year results as a non-underlying expense and that the item
did not require a prior year adjustment.

PwC reported on this matter to the Audit Committee at the
half-year review and again as part of the final audit. No issues
were identified from the additional audit procedures performed

Estimation of site profitability
As disclosed in Note 3 to the financial statements, gross profit is recognised
as homes are sold based on a profit margin for the development as a whole.
Calculating this margin includes forecasting revenue and costs for the development
as well as allocating land and infrastructure costs on a pro-rata basis.

The Audit Committee has overseen both control enhancements
implemented by management and the adoption of additional
audit procedures by PwC.

The Audit Committee reviewed and approved the Group’s
accounting policy in relation to profit recognition.

Profit recognition in relation to commercial land transactions can be
subjective and dependent on contractual terms.

The accuracy of allocation is monitored at Board level via the monthly
management accounts and quarterly forecasts. Any judgements are
discussed with the Audit Committee.

The external auditor regularly examines the allocation of revenue
and costs as a routine part of the external audit. It has identified
no significant issues in this regard.

Carrying value of inventory
Inventory is material to the Group’s balance sheet. There is a risk that the
carrying value will exceed its net realisable value, particularly in challenging
market conditions.

Management regularly reviews the carrying value of all sites under development
and of other inventory such as undeveloped land. These reviews take into
account the latest cash flow forecasts for the relevant development or land
parcel and comparable market valuations for land where applicable.

The Audit Committee considered management’s review of the
carrying value of inventory and the appropriateness of the level
of provisions held.

The external auditor reported on this matter to the Audit
Committee at the half-year review and again for the final audit.

The Audit Committee was satisfied that the carrying value of
inventory is appropriate.

Viability Statement
The Viability Statement testing that management undertook was based on the
latest available three-year forecast. To ensure that the financial position of the
Group was robust, management performed downside sensitivity testing by
applying a range of overlays including reduced sales rates and average selling
prices, a reduction in land sales and reduced affordable housing sales. This also
included operational inefficiency downsides, including delays to the delivery of
key sites and enhanced cost inflation.

Each of the above assumptions was based on management’s assumption of a
reasonable downside outcome.

The Audit Committee reviewed and challenged the assumptions
applied by management in arriving at the conclusion on the
Group’s viability. It agreed that they were reasonable.

Adoption of IFRS 16 “Leases”
The new International Financial Reporting Standard “Leases”, which will be
adopted by the Group from October 2019, will result in the recognition of a
new right to use asset and related liability for assets which are leased which fall
within the scope of this standard.

The Audit Committee considered management’s review of the
lease categories and the quantification of the lease asset and
related liability. The Committee also challenged management’s
approach to adoption and concurred with the choice not to
retrospectively apply the standard to the previous year.

Management carried out a comprehensive review of all leased assets across the
Group to ascertain the impact of adoption on the Group financial statements.

Countryside Properties PLC / Annual report 2019 71

Report of the Nomination Committee

NOMINATION
COMMIT TEE
Committee Chair
David Howell

Other members
Amanda Burton
Baroness Morgan
Douglas Hurt
Simon Townsend (from 10 May 2019)

Meetings held
5

Role and responsibilities of the
Nomination Committee
• Determining the structure, size and

composition of the Board

• Making recommendations on the

re-election of Directors retiring by rotation

• Leading the process for new Board

appointments and making
recommendations to the Board

• Conducting Directors’

performance evaluations

The Committee’s terms of reference are on
Countryside’s website at: investors.
countrysideproperties.com/governance.

Areas of focus in 2019
• Reviewing succession plans for

appointments to the Board and to
senior management, so as to maintain an
appropriate balance of skills and experience

• Reviewing the balance of skills, knowledge
and diversity of experience of the Board,
leading to the appointment of
Simon Townsend on 1 March 2019

• Considering any changes to the Board and
succession plans following the departure of
Rebecca Worthington on 17 April 2019

• Leading the process for the identification
and selection of a successor to the role
of Group Chief Executive, resulting
in the appointment by the Board of
Iain McPherson to the role with
effect from 1 January 2020

72 Annual report 2019 / Countryside Properties PLC

Dear Shareholders,
I am pleased to report on the main responsibilities of the Committee, how it has
fulfilled these during the reporting period and its plans for the coming year.

During the last 12 months, the Committee has overseen a number of significant
changes to the Board.

It led the search to find an additional Non-Executive Director with senior
Executive Director experience, resulting in the appointment of Simon Townsend
from 1 March 2019.

As reported on 17 April 2019, Rebecca Worthington stood down as Group Chief
Operating Officer. Rebecca played a critical role in the successful IPO process in
2016 and helping drive the subsequent strong growth of the business. The Board
is extremely grateful for Rebecca’s valued contribution to the Company over her
four years of service.

The Committee has also led the search for a successor to the role of Group Chief
Executive, resulting in the appointment by the Board of Iain McPherson to the role
with effect from 1 January 2020.

Further details about the appointment of Simon Townsend and his induction
programme can be found on page 64 and details about the process to find a suitable
successor to Ian Sutcliffe can be found on the following page.

During 2019, the Committee has remained fully compliant with the Code and comprised
all independent Non-Executive Director members of the Board.

The feedback from this year’s Board and Committee effectiveness evaluation process
is summarised on page 65 and the Committee’s objectives for the forthcoming financial
year (set out below) take into account the feedback received.

David Howell
Chair of the Nomination Committee
20 November 2019

Committee attendance
The number of Committee meetings attended by each member during the 2019
financial year was:

Number of meetings held

David Howell

Amanda Burton

Baroness Morgan

Douglas Hurt¹

Simon Townsend¹

1. The table above covers attendance during their period of office.

Nomination
Committee

Overall
attendance

5/5

2/2

100%

firm also identified a number of potential
external candidates, with Group Chief
Executive experience, who were interviewed
by the majority of the Board members.
The Committee agreed that Iain McPherson
was the best candidate for appointment with
Simon Townsend to provide mentoring to
Iain post-appointment, given Simon’s current
Chief Executive experience.

Following receipt by the Chairman of
Ian Sutcliffe’s notice of intention to retire
and step down as Group Chief Executive,
the Committee convened at short notice
on 20 November 2019 and agreed to
recommend that 31 December 2019 should
be Ian’s last day of service as Group Chief
Executive. The Committee also agreed to
recommend the appointment of Iain McPherson
as Group Chief Executive, to take effect from
1 January 2020, his having successfully met
all development requirements. The following
Board meeting approved the recommendations
of the Committee.

The Committee’s objectives
for the coming year
The Committee has agreed a revision to its
terms of reference to take into account the
UK Corporate Governance Code 2018, which
applies to the Company from 1 October 2019
investors.countrysideproperties.com/governance.
The Committee will continue to focus on ensuring
that the composition of the Board and the
Group’s executive management is appropriate
for delivery of the Group’s strategy and that
the requirements of the new 2018 Code
continue to be met.

For the next 12 months the Committee will
continue to keep the Board’s composition,
balance, diversity and skill-set under careful
review and will work to ensure that succession
plans reflect the various Government initiatives
to increase diversity, including gender and ethnicity.

The work of the Committee
While the Board is responsible for succession
generally, the Committee advises the Board
on appropriate succession planning over time.
This involves reviewing the Board’s composition,
balance, diversity, skill-sets and individual
Directors’ time commitments. The Committee
also oversees the long-term succession planning
for the members of the Executive Committee
and key managerial promotions during the year.

The Committee leads the process for all Board
appointments and is responsible for reviewing
candidates and making a final recommendation
to the Board, in compliance with the Code.
The Board’s Diversity Policy recognises that
diversity, in all its dimensions, is important to
support innovation, strategic development and
operational efficiency. The policy makes clear that
when proposing candidates for appointment
to the Board, the recommendations of the
Hampton-Alexander Review and the Parker
Report (regarding the representation of female
and ethnic minority directors respectively) will
be taken into account.

During 2019, the Committee met five times to
agree a succession plan strategy for the Directors,
to agree changes to the membership, composition
and responsibilities of the Executive Committee,
and to review the findings of the 2019 Board
and Committee evaluation process.

The rigorous and transparent procedure for
making appointments to the Board and its
Committees involves assessing the skills and
capabilities required, drafting a description of
the role, and evaluating potential candidates,
before making a recommendation to the Board.

Following a review of the balance of the Board’s
skills and experience, the Committee commenced
a search process for a Non-Executive Director
with senior Executive Director experience.
Having determined the search criteria and
instructed an external executive search firm,
Board members met various potential candidates,
before selecting Simon Townsend, who joined
the Board as a Non-Executive Director from
1 March 2019.

The search for a successor to the role of
Group Chief Executive involved a review of
both internal and external candidates for the
role. Having appointed an external executive
search firm, it conducted various interviews
and tests of the internal candidates to assess
their suitability and aptitude for the role against
the agreed criteria. This process identified one
potential internal candidate (Iain McPherson,
the Divisional CEO for Partnerships South)
for the role, whose suitability was assessed
as subject to the satisfactory achievement
of certain development objectives identified
by the executive search firm. The search

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Countryside Properties PLC / Annual report 2019 73

Directors’ remuneration report

Introduction to the Directors’ remuneration report

REMUNERATION
COMMIT TEE
Committee Chair
Amanda Burton

Other members
David Howell
Baroness Morgan
Douglas Hurt
Simon Townsend (from 10 May 2019)

Meetings held
7

Role and responsibilities of the
Remuneration Committee
• Recommending to the Board the Company’s

policy on executive remuneration

• Setting overarching principles and parameters

and the governance framework of the Group’s
Remuneration Policy

• Determining the individual remuneration and
benefits package of each of the Company’s
Executive Directors

You can see the Remuneration Committee’s
terms of reference on Countryside’s website at:
investors.countrysideproperties.com/governance.

Areas of focus in 2019
• Review of the Remuneration Policy and
impact of the updated UK Corporate
Governance Code

• Review of the Committee’s terms of reference

• Review of gender pay gap

• Consideration and approval of grants under
the Deferred Bonus Plan and SAYE plan

• Determination of LTIP recipients, grant level,

targets and post-vesting holding periods

• Determination of bonus targets and awards

• Determination of annual salary increases for
the Executive Directors and senior management

• Review and benchmarking of Executive

Director and senior management remuneration

• Determination of the financial leaving

arrangements for Rebecca Worthington

• Review and benchmarking of overall

employee benefits

• Consideration of the structure and targets

for the 2020 annual bonus

74 Annual report 2019 / Countryside Properties PLC

Dear Shareholders,
I am pleased to present on behalf of the Board the Directors’ Remuneration Report
of the Remuneration Committee (the “Committee”).

The Committee strives to align pay with strategy. Our strategy continues to focus
on the three factors of sector-leading growth, superior return on capital and building
resilience throughout the business cycle. Our remuneration strategy supports these
three factors, and the long-term and short-term targets we agree for our Executive
Directors and senior management aim to incentivise our most senior people towards
successful delivery of the strategy.

The Directors’ Remuneration Policy (“DRP”) was approved for three years at the
Group’s Annual General Meeting in January 2017, where more than 99% of votes
were in favour. Last year’s Annual Report on Remuneration was approved by 98.9%
at the Annual General Meeting in January 2019.

We will be seeking shareholder approval for a new DRP at the AGM in January 2020.
In preparing for this vote, the Committee has reviewed the DRP to ensure it remains
aligned with Countryside’s business strategy, investor expectations and market practice
and takes account of recent governance developments. We shared these changes with
our top ten shareholders over the summer. The proposed key changes to the DRP
are as follows:

• Pension: for new Executive Directors the maximum contribution will be 10% of

base salary, in line with our senior management population but below the level of
the external market for roles at this level. The average contribution we make to our
employee base as a whole is 6% (in line with the market). The Committee
recognises investor views in this area and will keep the maximum level of provision
permitted under the Policy under review so that we are able to reach alignment
over time as the market adjusts.

• LTIP: a two-year post-vesting holding period has been introduced, taking the total
period from grant to release to five years for all awards from December 2018.

• Post-employment shareholding requirement: Executive Directors are required to

retain the lower of their existing shareholding from incentive awards granted from
1 October 2019 or two times their base salary for two years post-employment.

• Committee discretion: the Committee recognises that it is expected to use

discretion to override formulaic outcomes in incentive schemes if they produce a
result that is not as intended, and has updated the rules of the incentive plans to
ensure that it has appropriate powers of discretion. During the year the Committee
reviewed the leaving arrangements for Rebecca Worthington determining that, in
light of her outstanding contribution to the business and the reasons for her departure,
that she should be treated as a good leaver under the Deferred Bonus and LTIP.

A table outlining the core terms of the proposed new DRP for Executive Directors
is set out on page 75.

On behalf of the Remuneration Committee, I would like to thank shareholders for
their continued support.

The work of the
Remuneration Committee
Gender pay gap
The Committee undertook a full review
of Countryside’s gender pay gap during the
year. Our mean gender pay gap is now 28%,
a reduction from the 33% we reported last
year. Although there is still work to be done to
address the gender pay gap, we are confident
that there are no equal pay issues. We continue
to address the underlying issues relating to this
gap, and this will be an ongoing focus for the
Committee in 2020.

Share plans
The Committee approved grants under the
Group’s share plans, including the 20% discount
to market value that was again applied to the
grant under the SAYE plan. Around half of our
employees now participate in the SAYE plan.

How did we perform in 2019?
The annual bonus in 2019 was measured against stretching targets with the component conditions
summarised below:

Annual bonus

Adjusted operating profit

Group return on capital employed (“ROCE”)

Adjusted operating margin

NHBC Recommend a Friend

2019
max possible

50%

20%

15%

2019
pay-out

19.1%

20%

15%

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In total our bonus pay-out for 2019 was 69.1%. The Committee believes the bonus outcome is
fully warranted given the Group’s strong financial performance in challenging market conditions.

Notwithstanding our sector-leading growth in 2019 and a marked improvement in customer
service as measured by the NHBC Recommend a Friend metric, the stretching bonus target for
adjusted operating profit was not achieved. The bonus outturn is calculated with reference to
published adjusted operating profit.

Adjusted operating margin was at the upper end of our expectations and Group ROCE was again
strong. 2019 saw the introduction of a customer satisfaction metric into the bonus for the first
time. It was particularly pleasing that our overall customer satisfaction score was over 90%, which
is in line with five-star builder status as awarded by the HBF.

We provide full details of the targets and our performance against them in the Annual Report on
Remuneration (see page 84).

Executive Directors’ pay in 2019

Ian Sutcliﬀe £’000

Rebecca Worthington £’000

Salary Benefits
18
546

Pension
120

Annual bonus
566

Long-term incentives1
1,403

Salary
404

Benefits
10

Pension
35

Annual bonus
226

Long-term incentives1
703

2019

2018

Total
2,653

Total
2,196

2019

2018

Total
1,378

Total
1,305

Salary
530

Benefits
18

Pension
116

Annual bonus
795

Long-term incentives
737

Salary
318

Benefits
18

Pension
50

Annual bonus
477

Long-term incentives
442

Mike Scott £’000

Salary
300

Benefits
18

Pension
49

Annual bonus
311

Long-term incentives
237

2019

Total
915

1. Includes TSR element of February 2016 LTIP award and all elements of the December 2016 LTIP award.

Fixed pay

Salary

Benefits

Pension

Performance-related pay

Annual bonus

Long-term incentives

The performance period for the December 2016 LTIP award ended on 30 September 2019. As disclosed later in this report, the ROCE target vested
at 100%, TNAV target vested at 64.3% and TSR vested at 67.8%, resulting in an overall vesting of 77.9%. The TNAV outturn was adjusted for the
impact of shares purchased by the Employee Benefit Trust and the increase in the dividend pay-out ratio from 30% to 40% announced in May 2019.

Remuneration Policy for 2020

Summary of Remuneration Policy
Element

Policy summary

Base salary

Base salaries will be set based on the market value of the role and the experience and performance of the individual.

Pension

The Company will provide either contributions to the Group’s defined contribution pension scheme or a pension salary supplement.

Annual bonus

A maximum award of 150% of salary.

The annual bonus is paid annually and is dependent on the achievement of financial and other strategic performance metrics over
the financial year.

Two-thirds of amounts earned are paid in cash, with one-third deferred as shares for a period of three years.

Long-Term
Incentive Plan
(“LTIP”)

A maximum award of 200% of salary.

LTIP awards will vest subject to stretching targets, which for awards granted in the 2020 financial year include EPS and ROCE.

A post-vesting holding period of two years applies for Executive Directors for grants made from 1 October 2018.

Countryside Properties PLC / Annual report 2019 75

Directors’ remuneration report continued
Introduction to the Directors’ remuneration report continued

The Committee is mindful that there are a variety of views amongst
investors on relative TSR as a measure and therefore considered the
continued use of relative TSR carefully. Its conclusion was that in a cyclical
industry such as housebuilding, measuring relative TSR against a broad
market index such as the FTSE 250 may result in a misalignment and
potentially “boom and bust” vesting outcomes. The Committee also
considered whether the other housebuilders may provide a more
appropriate comparator group than the FTSE 250 against which to
measure relative TSR. However, it was concerned that high pay-outs
could still be generated when the housing market is in a downturn for
performing “less badly” than other housebuilders. It was also concerned
given the Group’s strong growth rate in recent years that retaining TSR
but measuring performance against other housebuilders may not provide
an appropriate degree of stretch.

Whilst TNAV has been an important area of focus for the period since
IPO, as the Company enters the next phase of its development, the
Committee felt that a metric that is based on sustainable growth in
earnings would be more appropriate and would better capture the value
created for shareholders. We therefore intend to introduce an adjusted
basic EPS growth metric to replace TNAV. Use of earnings is more
consistent with the measures used by our peers (and companies generally)
and is favoured by some investors as an all-encompassing measure of
the growth of the business. We also feel that this provides a good line
of sight between management performance and their reward and gives
clear alignment with the Company’s share price via the price/earnings
multiple. Used together with ROCE, this provides a focus on profitable
growth and the efficient use of capital. The definition of adjusted basic
EPS will be based on basic adjusted basic EPS as disclosed in
Countryside’s Annual Report and Accounts.

The LTIP targets for the December 2019 grant will be approved by
the Committee nearer to the date of grant and will be fully disclosed
to shareholders.

We will continue to disclose annual bonus targets on a retrospective
basis, given the commercial sensitivity of these targets.

Conclusion
The Committee recognises the importance of developing a close
relationship with shareholders in facilitating its work in developing the
Remuneration Policy. We were extremely pleased with the levels of
support received for our Policy and Annual Report on Remuneration
at the Company’s AGM in January 2019. We will continue to ensure
that our Remuneration Policy is both aligned with shareholders’ interests
and attracts and retains executives of the required calibre to ensure the
Company’s continued success. On behalf of the Committee, I welcome
your feedback and ask for your support at the forthcoming Annual
General Meeting.

Amanda Burton
Chair of the Remuneration Committee
20 November 2019

Remuneration Policy for 2020 continued
Changes to salaries
Following a detailed review of Executive Director remuneration last year
performed with support from Aon, the Committee determined that the
Group Chief Executive’s salary should this year again be increased by 3%,
in line with the award to the wider employee base. On 17 April 2019
the Group Chief Operating Officer left the Group, and her role was
not replaced. As she has now secured alternative employment, we have
applied mitigation to amounts payable under her leaving arrangements
as agreed on her departure.

Upon his appointment as Group Chief Financial Officer in October 2018,
Mike Scott’s base salary was set at £300,000, below the Committee’s
view of the market rate for the role and below that of his predecessor.
To reflect his excellent performance in this role and following consultation
with major shareholders, the Committee has agreed an increase to
£350,000 from 1 October 2019. Subject to continued performance
and development in the year, a further increase to £400,000 is proposed
from 1 October 2020. Once the realignment has been completed, it is
anticipated future increases will be in line with the general workforce.

The Executive Directors will again be eligible for a maximum bonus
opportunity of 150% and LTIP of 200% of base salary for the
forthcoming financial year.

Changes to bonus metrics
In 2020, Group ROCE will be removed as a bonus measure, with annual
bonus targets to be based on Group adjusted operating profit, Group
adjusted operating margin, and Group NHBC Recommend a Friend score.
ROCE will remain as a long-term measure of performance in the LTIP
(see below) to ensure the requisite focus remains on this important
measure. In line with the overall discretion of the Remuneration Committee
to determine the size of any bonus payment, as described on page 81,
and in line with previous years, the Committee will take into account
the overall performance of an Executive Director against the in-year
and longer-term strategic goals of the Group when determining bonus
awards. The Committee expects that 2020 Group adjusted operating
profit should be at least equal to the 2019 outturn for bonuses to be
paid to the Executive Directors.

Changes to LTIP metrics
As we approach four years since the IPO, the Committee considered
it appropriate to review more fundamentally the metrics used under the
LTIP. As a result of this review, the Committee decided to retain ROCE
and replace the relative total shareholder return (“TSR”) and TNAV
measures with adjusted basic EPS as outlined opposite.

Committee attendance
The number of Remuneration Committee meetings attended by each
member during the 2019 financial year was:

Remuneration
Committee

Overall
attendance

Number of meetings held

Amanda Burton

David Howell

Douglas Hurt

Baroness Morgan

Simon Townsend¹

7/7

2/2

100%

1. The table above covers attendance during since the date of appointment.

76 Annual report 2019 / Countryside Properties PLC

Remuneration policy report

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Summary of remuneration for 2019 – alignment
between performance and pay
In 2019, the meetings of the Committee covered the following key areas:

• review of the Remuneration Policy and impact of the updated UK

Corporate Governance Code;

• review of the Committee’s terms of reference;

• review of gender pay gap;

• consideration and approval of grants under the Deferred Bonus Plan

and SAYE plan;

• determination of LTIP recipients, grant level, targets and post-vesting

holding periods;

• determination of bonus targets and awards;

• determination of annual salary increases for the Executive Directors

and senior management;

• review and benchmarking of Executive Director and senior

management remuneration;

• determination of the financial leaving arrangements for

Rebecca Worthington;

• review and benchmarking of overall employee benefits; and

• consideration of the structure and targets for the 2020 annual bonus.

Overview of Remuneration Policy
The Company’s first Remuneration Policy was reviewed fully prior to
listing in 2016, in accordance with the regulations and guidance in force
at that time. This ensured the Remuneration Policy in place was appropriate
for a listed company. The Policy was effective from the 2017 AGM and,
subject to formal approval by shareholders, will be replaced at the 2020
AGM by the new Policy outlined in this report. Accordingly, during the
year the Committee undertook a thorough review of the current Policy
to ensure that it remains aligned with the business strategy and culture,
reflects the best practice expectations of the Group’s investors and is
appropriately positioned relative to the market.

The Company’s aim remains the same: to attract, retain and motivate the
best talent to help drive continued growth and success. Our Remuneration
Policy aims to align the interests of the Executive Directors, senior executives
and employees with the long-term interests of shareholders. It aims to
support a high performance culture with appropriate reward for superior
performance without creating incentives that will encourage excessive risk
taking or unsustainable Company performance.

Overall remuneration levels have been set at a level that is considered by
the Committee to be appropriate for the size and nature of the business.

Considerations when determining Remuneration
Policy
Shareholder views
The Committee is committed to maintaining a dialogue with our
shareholders and we welcome their feedback. Any feedback received will
be considered as part of the Committee’s annual review of Remuneration
Policy. Dialogue with shareholders has underpinned the new Remuneration
Policy as we have continued our dialogue with shareholders during the year
and we have had no adverse comments from shareholders about our
Policy or remuneration payments during the year.

Group employees
As part of the Board’s process of engagement with the workforce it is
able to obtain information on the views of the workforce in relation to
remuneration. The Committee also reviews the policies for the wider
workforce and receives updates regarding remuneration for employees
across the Company and considers these when determining the
remuneration for the Directors.

The Policy described below applies to the Group’s Executive Directors.
Whilst the principles of the Policy are designed with due regard to
employees across the Group, there are differences that exist between
Executive Director and senior management remuneration and that of the
general workforce, primarily driven by the need to incentivise Executives
around longer-term strategic performance which, in turn, places a greater
proportion of pay “at risk”. Variable remuneration, particularly the LTIP, is
restricted to more senior employees who may directly influence Group
performance. However, the Committee is committed to promoting a
culture of widespread share ownership, including the provision of an
all-employee share plan. Around half of eligible employees participate
in at least one share plan.

Governance best practice
In determining the Executive Director Remuneration Policy and practices,
the Committee has also considered alignment with the 2018 UK Corporate
Governance Code with respect to the following characteristics:

• Clarity: we are committed to transparent Director pay decisions,
with the rationale for decisions, awards and, in particular, incentive
targets and outcomes published in detail.

• Simplicity: our Policy consists of fixed remuneration and annual

and long-term variable incentive components only. The share incentive
and bonus schemes were designed with simplicity and shareholder
preference in mind and we received no adverse comment from
shareholders about our proposed plans/schemes.

• Risk: the combination of reward for short-term business performance

(paid partly in cash and partly in deferred shares) and long-term,
sustainable performance and shareholder returns ensures the
incentives drive the right behaviours for the Group, its shareholders,
employees and customers. Formulaic outcomes produced by the
performance conditions can be overridden where in the Committee’s
opinion they do not reflect the true performance of the business or
individual Directors’ contributions. Furthermore, all variable pay awards
are subject to malus and clawback provisions.

• Predictability: there are defined threshold and maximum pay

scenarios which we have disclosed on page 83.

• Proportionality: there is a clear and direct link between Group

performance and individual rewards under the annual bonus and LTIP.
The Remuneration Committee reserves the right to withhold bonuses
where Group performance falls below a defined threshold level.

• Alignment to culture: the Remuneration Committee has worked
hard to formulate a Policy and incentive plans that support a high
performance culture, driving sustainable growth while also rewarding
appropriate short-term business performance, without encouraging
excessive risk taking or unsustainable Company performance. Financial
and non-financial incentive measures reflect and support business
strategy, in particular to build “Places People Love”. Our assessment
of annual performance considers both what is delivered and how
the Executive Directors have delivered it.

Countryside Properties PLC / Annual report 2019 77

Remuneration policy report continued

Directors’ Remuneration Policy
The following table summarises the key components of the Executive Director and Non-Executive Director remuneration arrangements, which will
form part of the Remuneration Policy subject to formal approval by shareholders at the 2020 AGM in accordance with the regulations set out in the
Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. It is intended that this Policy will apply for

Executive Directors

Objective

Link to strategy

Operation

Maximum opportunity

Performance measures and assessment

Base salary

Recognises the market value of
an Executive Director’s role, skill,
responsibilities, performance
and experience.

Other
benefits

Provides a market-competitive
package.

Annual bonus
scheme

Incentivises the Executive
Directors to deliver against goals
linked to the Company’s strategy.

The deferral element ensures
long-term alignment with
shareholder interests.

Long-Term
Incentive Plan
(“LTIP”)

Incentivises Executive Directors to
successfully deliver the Company’s
objectives over the longer term.

Creates alignment with investors
over this period.

Pension

Provides competitive levels of
retirement benefit to aid retention.

Save As
You Earn
(“SAYE”)
plan

Shareholding
guidelines

The purpose of this plan is
to encourage all employees
to become shareholders in the
Company and thereby align their
interests with shareholders.

Aligns Executive Directors’
interests with those of our
long-term shareholders
and other stakeholders.

78 Annual report 2019 / Countryside Properties PLC

Salaries are normally reviewed annually, with any changes effective as of 1 October each year.

There is no formal maximum salary. Other than where

Not applicable.

Current salaries, effective from 1 October 2019, are as follows:

– Group Chief Executive: £563,000

– Group Chief Financial Officer: £350,000

Salaries are set by reference to a market benchmark based on companies of a comparable size
operating in a similar sector. Salary reviews will also take into consideration an individual’s
performance, responsibility levels and internal relativities.

We review benefits periodically to ensure they remain market competitive.

Benefit values vary year on year depending

Not applicable.

The main benefits currently provided include:

– car or car allowance;

– life, personal accident, disability and health insurance;

– Directors’ and officers’ insurance; and

– other benefits, including flexible benefits, as provided from time to time (for example where

a Director relocates).

Executive Directors are eligible for other benefits which are introduced on broadly similar terms
for the wider workforce.

In addition, the Company may reimburse any reasonable business expenses and tax thereon.

Bonus awards will be granted annually. The performance period is one financial year. The Committee
determines pay-outs following the year end, based on achievement against a range of performance targets.

In line with the overall discretion of the Remuneration Committee to determine the size of any
bonus payment, as described on page 81, when determining bonus awards the Committee will take
into account the overall performance of an Executive Director against the Group’s in-year and
longer-term strategic goals. The Committee also retains a broader discretion to override bonus
outcomes if it deems necessary.

Up to two-thirds of the bonus award will be paid out in cash, with the remainder deferred into
shares for a period of three years (subject to continued employment).

Malus and clawback arrangements will apply to annual bonus awards. This enables a reduction in
vesting or the recovery of amounts paid in certain circumstances.

Awards of shares that vest three years from the date of grant. This is subject to achievement
of performance conditions, normally measured over a three-year period. Awards are subject
to malus and clawback provisions that enable reduced vesting or recovery of amounts paid
in certain circumstances.

Awards granted from 1 December 2018 will normally be subject to a two-year post-vesting holding
period, during which Executive Directors will not be permitted to sell vested shares other than to
pay tax or National Insurance contributions. This takes the total period from grant to release of LTIP
shares to five years.

Awards granted from 1 October 2019 onwards will also be subject to a broad discretion to override
the outturn if the Committee deems necessary.

there is a change of role or responsibility, any increases

will normally be only for inflation and/or in line with the

wider workforce. Starting salaries on appointment may

be set below the market level and, in this circumstance,

subject to performance, increased by more than

inflation as the employee gains experience over time.

on premiums.

these benefits.

The maximum potential value is the cost of providing

The maximum opportunity is 150% of salary.

The Committee will set performance targets annually, based on a range of financial and strategic

Participants may be entitled to dividends or dividend

equivalents on the deferred shares that represent the

measures selected to reflect the in-year goals of the business and its longer-term strategy and KPIs.

At least 50% of the bonus will be based on financial measures in any year.

value of dividends paid during the deferral period.

Targets are normally set on a sliding scale, with no more than 25% of the maximum typically payable

at threshold performance and 50% of the maximum typically payable for on-target performance.

The maximum LTIP award level is 200% of base salary.

LTIP performance will be assessed against a mix of metrics, including a balance between financial growth

and return metrics. For the awards to be granted in the 2020 financial year these metrics are:

Participants may at the Committee’s discretion receive

dividends or dividend equivalents representing the

– adjusted basic EPS; and

value of dividends paid during the performance period

– ROCE.

on LTIP awards.

Targets are set on a sliding scale, with no more than 25% of each element vesting at threshold

performance. The Committee will review and set weightings for measures and appropriate targets

before each grant.

The Committee may change the balance of the measures, or use different measures

for subsequent awards as appropriate.

Pension contributions are made into the Group’s defined contribution scheme.

The maximum contribution or equivalent allowance

Not applicable.

Alternatively, a participant may receive a cash allowance in lieu of pension (typically when they have
reached the annual or lifetime allowance for pension tax relief set by HMRC). We pay the cash allowance
less a reduction to reflect the Company’s obligation to pay Employer’s National Insurance on the sum paid.

Executive Directors are able to participate in HMRC-approved savings-based share plans available
to all employees of the Company.

Executive Directors will be eligible to participate in any all-employee share plan operated by the
Company on the same terms as other eligible employees.

Executive Directors are expected to build and maintain a holding in the Company’s shares to
a minimum value of two times their base salary over a five-year period.

Executive Directors must also retain the lower of their existing shareholding or two times their base
salary for two years post-employment; this requirement applies only to vested shares acquired from
share awards granted from 1 October 2019.

is up to 10% of base salary.1

For Ian Sutcliffe, the maximum is 25% of base salary

in accordance with his service agreement.

Maximum participation levels will be set based on the

Not applicable.

applicable limits set by HMRC from time to time.

Not applicable.

Objective

Link to strategy

Operation

Maximum opportunity

Performance measures and assessment

three years from that date. The key changes to the Policy which was approved at the 2017 AGM are a requirement for Executive Directors to retain
shares awarded after 1 October 2018 for two years post-employment and a reduction in the maximum Company pension contribution for new
Executive Directors. There are also changes to the performance measures in the LTIP which are being changed from TSR, TNAV and ROCE to
adjusted basic EPS and ROCE for grants made after 1 October 2019.

There is no formal maximum salary. Other than where
there is a change of role or responsibility, any increases
will normally be only for inflation and/or in line with the
wider workforce. Starting salaries on appointment may
be set below the market level and, in this circumstance,
subject to performance, increased by more than
inflation as the employee gains experience over time.

Not applicable.

Benefit values vary year on year depending
on premiums.

Not applicable.

The maximum potential value is the cost of providing
these benefits.

The maximum opportunity is 150% of salary.

Participants may be entitled to dividends or dividend
equivalents on the deferred shares that represent the
value of dividends paid during the deferral period.

The Committee will set performance targets annually, based on a range of financial and strategic
measures selected to reflect the in-year goals of the business and its longer-term strategy and KPIs.
At least 50% of the bonus will be based on financial measures in any year.

Targets are normally set on a sliding scale, with no more than 25% of the maximum typically payable
at threshold performance and 50% of the maximum typically payable for on-target performance.

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Long-Term

Incentive Plan

(“LTIP”)

Incentivises Executive Directors to

Awards of shares that vest three years from the date of grant. This is subject to achievement

successfully deliver the Company’s

of performance conditions, normally measured over a three-year period. Awards are subject

objectives over the longer term.

to malus and clawback provisions that enable reduced vesting or recovery of amounts paid

Creates alignment with investors

in certain circumstances.

over this period.

Awards granted from 1 December 2018 will normally be subject to a two-year post-vesting holding

The maximum LTIP award level is 200% of base salary.

Participants may at the Committee’s discretion receive
dividends or dividend equivalents representing the
value of dividends paid during the performance period
on LTIP awards.

LTIP performance will be assessed against a mix of metrics, including a balance between financial growth
and return metrics. For the awards to be granted in the 2020 financial year these metrics are:

– adjusted basic EPS; and

– ROCE.

Targets are set on a sliding scale, with no more than 25% of each element vesting at threshold
performance. The Committee will review and set weightings for measures and appropriate targets
before each grant.

The Committee may change the balance of the measures, or use different measures
for subsequent awards as appropriate.

The maximum contribution or equivalent allowance
is up to 10% of base salary.1

Not applicable.

For Ian Sutcliffe, the maximum is 25% of base salary
in accordance with his service agreement.

Maximum participation levels will be set based on the
applicable limits set by HMRC from time to time.

Not applicable.

1. This is in line with the level of pension provided to our senior management population.

Countryside Properties PLC / Annual report 2019 79

Base salary

Recognises the market value of

Salaries are normally reviewed annually, with any changes effective as of 1 October each year.

an Executive Director’s role, skill,

responsibilities, performance

and experience.

Current salaries, effective from 1 October 2019, are as follows:

– Group Chief Executive: £563,000

– Group Chief Financial Officer: £350,000

Other

benefits

package.

Provides a market-competitive

We review benefits periodically to ensure they remain market competitive.

Salaries are set by reference to a market benchmark based on companies of a comparable size

operating in a similar sector. Salary reviews will also take into consideration an individual’s

performance, responsibility levels and internal relativities.

The main benefits currently provided include:

– car or car allowance;

– life, personal accident, disability and health insurance;

– Directors’ and officers’ insurance; and

– other benefits, including flexible benefits, as provided from time to time (for example where

Executive Directors are eligible for other benefits which are introduced on broadly similar terms

a Director relocates).

for the wider workforce.

In addition, the Company may reimburse any reasonable business expenses and tax thereon.

Annual bonus

Incentivises the Executive

Bonus awards will be granted annually. The performance period is one financial year. The Committee

scheme

Directors to deliver against goals

determines pay-outs following the year end, based on achievement against a range of performance targets.

linked to the Company’s strategy.

In line with the overall discretion of the Remuneration Committee to determine the size of any

The deferral element ensures

bonus payment, as described on page 81, when determining bonus awards the Committee will take

long-term alignment with

shareholder interests.

into account the overall performance of an Executive Director against the Group’s in-year and

longer-term strategic goals. The Committee also retains a broader discretion to override bonus

outcomes if it deems necessary.

Up to two-thirds of the bonus award will be paid out in cash, with the remainder deferred into

shares for a period of three years (subject to continued employment).

Malus and clawback arrangements will apply to annual bonus awards. This enables a reduction in

vesting or the recovery of amounts paid in certain circumstances.

Pension

Provides competitive levels of

Pension contributions are made into the Group’s defined contribution scheme.

retirement benefit to aid retention.

period, during which Executive Directors will not be permitted to sell vested shares other than to

pay tax or National Insurance contributions. This takes the total period from grant to release of LTIP

shares to five years.

Awards granted from 1 October 2019 onwards will also be subject to a broad discretion to override

the outturn if the Committee deems necessary.

Alternatively, a participant may receive a cash allowance in lieu of pension (typically when they have

reached the annual or lifetime allowance for pension tax relief set by HMRC). We pay the cash allowance

less a reduction to reflect the Company’s obligation to pay Employer’s National Insurance on the sum paid.

Executive Directors are able to participate in HMRC-approved savings-based share plans available

to all employees of the Company.

Executive Directors will be eligible to participate in any all-employee share plan operated by the

Company on the same terms as other eligible employees.

Save As

You Earn

(“SAYE”)

plan

The purpose of this plan is

to encourage all employees

to become shareholders in the

Company and thereby align their

interests with shareholders.

Shareholding

Aligns Executive Directors’

Executive Directors are expected to build and maintain a holding in the Company’s shares to

guidelines

interests with those of our

a minimum value of two times their base salary over a five-year period.

long-term shareholders

and other stakeholders.

Executive Directors must also retain the lower of their existing shareholding or two times their base

salary for two years post-employment; this requirement applies only to vested shares acquired from

share awards granted from 1 October 2019.

Remuneration policy report continued

Notes to the Policy table
For the avoidance of doubt, in approving this Directors’ Remuneration
Policy, authority is given to the Company to honour any commitments
entered into previously with Directors.

Malus and clawback
The circumstances in which malus and clawback may apply include a
material misstatement of the Company’s accounts, error in assessment
of performance or calculation of the number of awards, individual gross
misconduct or conduct resulting in reputational damage to the Group
and corporate failure resulting in the appointment of administrators for
the Group. Clawback may be applied for up to two years after the
determination of bonus or vesting of long-term incentives.

Performance measures and targets
The short and long-term incentive plans include a number of different
financial performance measures aligned to the performance of the
Company. Targets will be set with reference to prior-year performance,
internal budgets and external market expectations. Performance targets
will be set so as to represent an achievable but stretching performance
for the business.

We determine annual bonus performance metrics at the start of each
financial year based on the key business priorities for the year ahead.
The majority will be linked to a profit metric, as this is the primary
indicator of our sustainable growth. We consider the target ranges for
the measures used in the annual bonus scheme to be commercially
sensitive at the start of the financial year. Prospective disclosure is
therefore not in the interest of shareholders. Other than in exceptional
circumstances where elements remain commercially sensitive, we will
publish actual targets, performance achieved and awards made at the
end of the performance periods so that shareholders can fully assess the
basis for any pay-outs.

We determine LTIP metrics at the time of grant, selecting performance
measures to support the Company’s long-term strategy. Future metrics
will align our long-term goal of value creation for shareholders through
strong underlying financial growth and the efficient use of capital to generate
cash. Accordingly, the Committee considered the LTIP metrics during 2019
and has decided that an adjusted EPS measure will account for 50% of the
December 2019 grant and a ROCE measure the remaining 50%.

Discretion
The Remuneration Committee retains discretion over certain elements
of the Policy as set out in the report including the operation of the
variable incentive schemes. The Committee may adjust elements of
the unapproved plans including, but not limited to:

• participation;

• the timing of the grant of award and/or payment;

• the size of an award (up to plan limits) and/or payment;

• in exceptional circumstances, to grant and/or settle an LTIP award in cash;

• discretion relating to the measurement of performance in the event of

a change of control;

• determination of a good leaver (in addition to any specified categories)

for incentive plan purposes;

• adjustments required in certain circumstances (e.g. rights issues,

corporate restructuring and special dividends); and

• the ability to recognise exceptional events within existing performance

conditions.

Should any such discretion be exercised, an explanation would be provided
in the following Committee Chair’s Statement and Annual Report on
Remuneration and may be subject to shareholder consultation as appropriate.

Non-Executive Director remuneration policy
The Board as a whole is responsible for setting the remuneration of the Non-Executive Directors, other than the Chairman, whose remuneration is
determined by the Committee and recommended to the Board. The table below sets out the key elements of the policy for Non-Executive Directors:

Objective

Link to strategy

Operation

Maximum potential value

Fees

The core element of
remuneration. It is set at a level
sufficient to attract and retain
individuals with appropriate
knowledge and experience in
organisations of broadly similar
size and complexity.

Fee levels are sufficient to attract
individuals with appropriate
knowledge and experience.

Non-Executive Directors are paid
a base fee and additional fees in
relation to extra responsibilities
undertaken such as chairmanship
of Committees and the role of
Senior Independent Director
or another designated role.
In exceptional circumstances, fees
may also be paid for additional time
spent on the Company’s business
outside of normal duties.

Fees are reviewed each year, with any increases normally effective
from 1 October.

Any increases in fees will be determined based on time commitment
and will take into consideration the level of responsibility and fees
paid in other companies of comparable size and complexity, e.g.
median fee levels of comparable companies within the FTSE 250
(excluding investment trusts).

Non-Executive Directors do not receive any variable remuneration
element or receive any other benefits, other than being covered for
disability benefits under the Company’s insurance whilst travelling
on Company business.

The Company will pay reasonable expenses incurred by the
Chairman and Non-Executive Directors. The Company may also
provide limited hospitality and selected benefits and settle any tax
thereon provided that this is in connection with the performance
of their role.

80 Annual report 2019 / Countryside Properties PLC

Approach to recruitment remuneration
The Committee’s approach to recruitment remuneration is to pay no more than is necessary to attract candidates of the appropriate calibre and
experience needed for the role. The remuneration package for any new recruit would be assessed following the same principles as for the Executive
Directors, as set out in the Remuneration Policy table.

Where an existing employee is promoted to the Board, the Executive Director policy would apply. Historical entitlements would continue to be
honoured and allowed to pay out on their original terms, and will be fully disclosed in the Annual Report on Remuneration at the relevant time.

The table below summarises our key policies with respect to recruitment remuneration:

Remuneration element

Recruitment policy

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Base salary and benefits

Pension

Annual bonus

Long-term incentives

Share buy-outs/
replacement awards

Relocation policies

We will set the salary level taking into account a number of factors, including market practice, the individual’s
experience and responsibilities and other pay structures within Countryside. It will also be consistent with the
salary policy for existing Executive Directors. Starting salaries may therefore be set below the market level and,
subject to performance, increased by more than inflation as the employee gains experience over time.

The Executive Director will be eligible to receive benefits in line with Countryside’s benefits policy as set out in
the Remuneration Policy table.

An Executive Director will be able to participate in Countryside’s defined contribution pension scheme,
or receive a cash allowance in lieu of pension benefits in line with the policy for existing Executive Directors
up to a maximum of 10% of salary.

An Executive Director will be eligible to participate in the annual bonus scheme as set out in the Remuneration
Policy table.

The maximum opportunity will be no more than 150% of salary, of which up to two-thirds of the bonus award
will be paid out in cash, with the remainder deferred into shares, as per the policy for existing Executive Directors.

Depending on the timing of the appointment, the Committee may deem it appropriate to set different annual
bonus performance conditions for Executive Directors during their first year of appointment.

An Executive Director will be eligible to participate in Countryside’s Long-Term Incentive Plan as set out in the
Remuneration Policy table.

The maximum opportunity offered may be up to 200% of salary, as per the policy for existing Executive Directors.

An LTIP award can be made shortly following an appointment (assuming the Company is not in a close period).

The Committee’s policy is to not provide buy-outs as a matter of course. However, should the Committee believe
it necessary to grant awards to replace those from a previous employer, the Committee will seek to structure any
replacement awards so that overall they are no more favourable than the awards due to be forfeited.

In determining the quantum and structure of any buy-out, the Committee will take into account the fair value and,
as far as practicable, the timing and performance requirements of foregone remuneration.

Where possible, existing arrangements will be used, although in unusual circumstances the Committee may also
make use of the flexibility provided by the Listing Rules to make awards without prior shareholder approval.

Should a newly recruited Executive Director be required to relocate, the Company will meet reasonable
associated costs for a limited time period. Such relocation support could include but not be limited to: the
payment of legal fees; removal costs; temporary accommodation/hotel costs; a contribution to Stamp Duty;
the replacement of non-transferable household items; and related taxes incurred. In addition, and in appropriate
circumstances, the Committee may grant additional support relating to the payment of school fees.

The Company’s policy when setting fees for the appointment of new Non-Executive Directors is to apply the policy which applies to current
Non-Executive Directors.

Countryside Properties PLC / Annual report 2019 81

Remuneration policy report continued

Service agreements and compensation for loss of office
When setting notice periods, the Committee has regard to market practice and corporate governance best practice. Our policy is that notice periods
for Executive Directors should be no longer than 12 months. The Group Chief Executive and the Group Chief Financial Officer have contracts with
notice periods of 12 months on either side. The notice period for Non-Executive Directors is three months, save in the case of the Chairman whose
notice period is six months.

The Non-Executive Directors do not have service contracts but are appointed under letters of appointment, which provide for a review after an initial
three-year term with the possibility of annual renewal. All service contracts and letters of appointment are available for viewing at the Company’s
registered office and at the AGM.

When approving any termination payments for a departing Director, the Committee will always seek to minimise cost to the Company whilst
complying with the contractual terms and seeking to reflect the circumstances in place at the time.

The Committee reserves the right to make additional payments where considered in the best interests of the Company:

• where such payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation); or

• by way of settlement or compromise of any claim arising in connection with the termination of an Executive Director’s office or employment;

the Committee may also provide assistance with outplacement costs or settle reasonable legal fees where considered appropriate.

The table below sets out, for each element of total remuneration, the Company’s policy on payment for loss of office in respect of Executive Directors
and any discretion available to the Committee. Broadly, treatment will depend on the circumstances of departure, in particular whether a leaver is a
“good leaver”. For a “good leaver” the following will normally apply:

Remuneration element

Treatment on cessation

Salary, benefits and pension

Received for the notice period or payment in lieu of notice. Statutory redundancy payments as appropriate.

Annual bonus

No entitlement to a bonus; however, a pro-rata bonus may be paid in cash, following the end of the financial year
in which they leave.

Deferred bonus

Deferred bonus share awards will normally vest on the original vesting date.

LTIP

The rules of the LTIP set out the treatment of “good leavers”. In summary, awards will normally vest on the normal
vesting date and be subject to pro-rating. However, the Committee has discretion to allow awards to vest on
cessation and to waive pro-rating where it feels doing so is appropriate. Any post-vesting holding obligations will
continue to apply on the original terms, subject to Committee discretion to waive. The Committee has discretion
to amend awards post-cessation of employment if the circumstances of the former Executive Director by which
good leaver treatment was originally determined materially change so that such treatment is no longer appropriate.

Change of control
On a change of control of the Group, the following provisions would apply to Executive Directors:

Remuneration element

Treatment on change of control

Salary, benefits and pension

Received for the notice period or payment in lieu of notice if notice is given. Statutory redundancy payments
as appropriate.

Annual bonus

Deferred bonus

LTIP

No entitlement to a bonus; however, a pro-rata bonus may be paid following the end of the financial year
in which they leave.

Vesting of deferred bonus shares, although the Committee may determine that awards should be rolled over
into shares in the acquiring company.

The rules of the LTIP set out the treatment on a change of control. In summary, awards will normally vest at the
date of change of control and normally be subject to pro-rating. However, the Committee has discretion to waive
pro-rating where it feels it is appropriate to do so and may determine that awards should be rolled over into
shares in the acquiring company.

82 Annual report 2019 / Countryside Properties PLC

Directors’ service contracts and letters of appointment
Executive Directors also receive life assurance, private health insurance and car allowances.

Executive Directors

Date
of current contract

Payment
in lieu of notice

Pension

Restrictive covenants

Notice
(Executive/Company)

Ian Sutcliffe

29 January 2016

Mike Scott

1 October 2018

12 months’ salary
and benefits

25% of salary
and only as a
cash allowance

10% of salary

Non-compete (6 months)
Non-poaching (12 months)
Non-solicit (12 months)

12 months/
12 months

G
o
v
e
r
n
a
n
c
e

Non-Executive Directors

David Howell

Amanda Burton

Baroness Morgan

Douglas Hurt

Simon Townsend

Date of appointment
to the Board

Date of current letter
of appointment

Unexpired term of
appointment

14 December 2015

1 October 2018

17 December 2015

14 September 2018

17 December 2015

14 September 2018

1 January 2018

14 September 2018

1 March 2019

15 February 2019

2 years

3 years

The Non-Executive Directors are entitled to claim out of pocket expenses incurred in the performance of their duties (and the Company may settle any
tax thereon) and payment in lieu of notice where notice is served. They are not entitled to participate in the Company’s share, bonus or pension schemes.

Policy in respect of external Board appointments for Executive Directors
It is recognised that external non-executive directorships may be beneficial for both the Company and the Executive Director concerned. At the
discretion of the Board, Executive Directors are permitted to retain fees received in respect of any such non-executive directorship.

Application of Remuneration Policy

Ian Sutcliﬀe

Mike Scott

0
0
0
£

’

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

£1,688k

33%

25%

42%

£702k

100%

£2,673k

42%

32%

26%

£3,236k

52%

26%

22%

0
0
0
£

’

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

Minimum

Target

Maximum

Maximum
+ share price growth

£400k

100%

Minimum

£1,012k
35%
26%

39%

Target

£1,625k

43%

32%

25%

£1,975k

53%

27%

20%

Maximum

Maximum
+ share price growth

Fixed

Bonus

LTIP

The assumptions noted for “on-target” performance in the graph above are provided for illustration purposes only:

Minimum: fixed pay only (salary + benefits + pension).

Target: fixed pay + 50% pay-out of the annual bonus entitlement (75% of salary) + 50% vesting of the LTIP (100% of salary).

Maximum: fixed pay + 100% pay-out of the annual bonus (150% of salary) + 100% vesting of the LTIP (200% of salary).

Maximum plus 50% share price growth: shows maximum performance plus the impact on the LTIP of a hypothetical 50% increase in the share price.

• Salary levels are based on those as at 1 October 2019.

• The value of benefits is that disclosed in the single figure for 2019.

• Pension is 25% of salary (excluding bonus) for Ian Sutcliffe and 10% of salary (excluding bonus) for Mike Scott.

• Amounts have been rounded to the nearest £1,000 and for simplicity the value of SAYE, in which all employees may participate on the same terms,

are excluded.

• We have taken no account of share price growth (except in the fourth scenario) or dividends on share awards.

Countryside Properties PLC / Annual report 2019 83

Annual report on remuneration

Single total figure of remuneration (audited)
The table below sets out a single remuneration figure for Executive and Non-Executive Directors for all qualifying services for the year ended
30 September 2019:

Executive Directors

Ian Sutcliffe5

Rebecca Worthington5

Mike Scott

Non-Executive Directors

David Howell

Amanda Burton

Baroness Morgan

Douglas Hurt

Simon Townsend6

Salary/fees
£’000

Benefits 1
£’000

Pension 2
£’000

Annual
bonus 3
£’000

Long-term
incentives 4
£’000

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

546

530

404

318

300

—

175

—

120

116

—

566

795

226

477

311

—

1,403

737

703

442

237

—

Total
£’000

2,653

2,196

1,378

1,305

915

—

175

—

1. Benefits include both cash and non-cash benefits, which are valued at their taxable amount. For Ian Sutcliffe this included a car allowance (£1,325 per month) and private medical insurance (£1,639 per annum).

For both Rebecca Worthington and Mike Scott this included a car allowance (£1,325 per month) and private medical insurance (£2,048 per annum).

2. Pension payments are stated net of employer’s National Insurance contributions where a cash allowance is paid in lieu of pension contributions. Mike Scott received a pension payment of £21,000

in December 2018 which related to the 2018 annual bonus. This was an entitlement of his contractual arrangements prior to joining the Board on 1 October 2018.

3. The annual bonus relates to performance during the financial year. The cash element is paid in December in the following financial year.

4. Long-term incentives for 2019 include the value of the TSR component of the February 2016 award which vested on 18 February 2019 as well as the full vesting of the December 2016 award.

The February 2016 TSR value was not included in the 2018 amount as the vesting percentage was not known at the date of the 2018 Annual Report and Accounts.

5. The Executive Directors are entitled to retain fees earned from non-executive appointments outside the Company. Ian Sutcliffe served as a Non-Executive Director of Ashtead Group plc during the year

until 2 January 2019 and received £18,750 for his services (2018: £62,000). He was a Non-Executive Director of Pegasus Life Limited from 25 February 2019 to 30 September 2019 and received £60,000
for his services to this company during his period in office. Rebecca Worthington served as a Non-Executive Director of The British Land Company PLC and up to her date of departure on 17 April 2019
received £44,830 (2018: £69,000). Her salary and benefits are shown pro-rata according to her period in office for the year ended 30 September 2019.

6. Simon Townsend joined the Board on 1 March 2019. His fees are shown pro-rata according to the number of months’ service for the year ended 30 September 2019.

Further details of each element of the Executive Directors’ remuneration package are set out on pages 78 and 79.

Annual bonus targets and outcomes (audited)
The table below sets out the 2019 bonus targets and outcomes relating to the annual bonus figures shown in the single figure in the table above.
The Committee was satisfied that these payments fairly reflected Group performance in the year.

The annual bonus targets were set to focus management on the growth of the business in line with our strategy and on improving operational
efficiency to improve returns to shareholders.

Performance required

2019 measure

Threshold
(25% pay-out)

Target
(50% pay-out)

Maximum
(100% pay-out)

Achieved

Pay-out level
(% of maximum)

Adjusted operating profit (50% weighting)

£228.0m

£240.0m

£250.2m

£234.4m

Return on capital employed (20% weighting)

Adjusted operating margin (15% weighting)

NHBC Recommend a Friend score (15% weighting)

33.0%

15.0%

80.0%

34.0%

15.5%

85.0%

35.0%

16.0%

90.0%

37.8%

16.5%

92.5%

38.2%

100%

84 Annual report 2019 / Countryside Properties PLC

Payment of bonuses is subject to the Committee being satisfied with the overall performance of an Executive Director against the in-year and
longer-term strategic goals of the Group. The Remuneration Committee considered the personal performance of the Executive Directors during
the year. It concluded that both Executive Directors had made significant contributions to the Group’s strategy and financial performance. As a result,
the Committee confirmed that the amounts as shown above were appropriate.

Bonus payments vest in a straight line between threshold and target, and between target and maximum. For Executive Directors and certain members
of senior management, one-third of bonus payments are deferred in shares which vest after three years. The deferred shares have no performance
conditions, but the individual must remain employed by the Group, subject to Remuneration Committee discretion.

The breakdown of the cash and deferred elements of the annual bonus is set out in the table below:

G
o
v
e
r
n
a
n
c
e

Ian Sutcliffe

Rebecca Worthington

Mike Scott

Total

To be paid in cash

To be deferred in shares

% of salary

% of bonus

566,049

226,090

311,016

103.67

377,366

150,727

207,344

66.7

188,683

75,363

103,672

33.3

Share scheme interests awarded during the year (audited)
The Executive Directors were invited to participate in the Company’s Long-Term Incentive Plan (“LTIP”) in line with our Remuneration Policy. An award
equivalent to 200% of salary was made to each Executive Director. The table below sets out details of the Executive Directors’ participation in the LTIP.

There is no minimum value guaranteed on vesting, with the following shares subject to a two-year holding period.

Date of grant

Award

Type

No. of
shares

Value of
the award 1

% of salary

Performance
conditions

Performance
period

Ian Sutcliffe

19 December
2018

Performance

Conditional
award

386,863

£1,091,998

200

Rebecca Worthington 19 December
2018

Performance

Nil-cost
option 3

283,416

£799,998

200

Mike Scott

19 December
2018

Performance

Conditional
award

212,562

£599,998

200

35% target ROCE
35% target TNAV
30% relative TSR 2

Three years ending
30 September 2021

35% target ROCE
35% target TNAV
30% relative TSR

Three years ending
30 September 2021

1. Calculated based on the average of the closing mid-market share prices for the three dealing days prior to the date of grant of 282.27 pence per share.

2. Relative total shareholder return compared to a comparator group comprising the FTSE 250 index, excluding investment trusts.

3. Directors may choose to receive LTIP awards as nil-cost options or conditional share awards.

The following Executive Directors also received deferred awards under the Deferred Bonus Plan in respect of the deferred element of their 2018 bonus,
details of which were set out in the 2018 Annual Report and Accounts. The table below sets out further details of the Executive Directors’ awards.

Date of grant

Award

Type

No. of
shares

Value of
the award 1

% of salary

Performance
conditions

Performance
period

Ian Sutcliffe

19 December
2018

Performance

Rebecca Worthington2 19 December
2018

Performance

Conditional
award

77,410

£265,000

46,446

£159,000

None

19 December 2021

None

19 December 2021

1. Calculated based on an average share price of 342.33 pence per share over the last 30 days of the financial year ended 30 September 2018.

2. As described above the Committee exercised discretion to grant good leaver status to Rebecca Worthington; see later paragraphs for her full exit package.

Mike Scott did not receive a deferred bonus award in December 2018 as he joined the Board on 1 October 2018.

Countryside Properties PLC / Annual report 2019 85

Annual report on remuneration continued

Vesting criteria for the FY19 LTIP awards (audited)
The vesting criteria for LTIP awards made in December 2018 are set out below:

Relative total shareholder return
(30% of awards)

Tangible net asset value
(35% of awards)

TSR vs
FTSE 250

Pay-out
% of element

Below threshold

Below median

Threshold

Target

Maximum

Median

—

Upper quartile

—

100

TNAV
£m

<1,075

1,075

1,100

1,125

Pay-out
% of element

—

100

Return on capital employed for the
year ending 30 September 2021
(35% of awards)

ROCE
%

<33.0

33.0

35.0

37.0

Pay-out
% of element

—

100

For the TNAV and ROCE performance conditions outlined above, vesting occurs on a linear basis between threshold and target and between target
and maximum. For the TSR performance condition, vesting occurs on a linear basis between threshold and maximum.

Long-Term Incentive Plan awards included in 2019 total remuneration figure (audited)
LTIP vesting criteria

LTIP award

February 2016

December 2016

LTIP award

December 2016

LTIP vesting

LTIP award

February 20161

December 20162,3,4

Performance
condition

Threshold
(20% vesting)

Maximum
(100% vesting)

Actual

% vesting

TSR

Threshold (median)

Upper quartile

96th percentile

Threshold (median)

Upper quartile

80th percentile

Performance
condition

TNAV (£m)

ROCE (%)

Threshold
(25% vesting)

Target
(50% vesting)

Maximum
(100% vesting)

720.0

30.0%

758.0

31.0%

796.0

32.0%

Actual

768.9

37.8%

93.0%

67.8%

% vesting

64.3%

100.0%

Performance
condition

Weighting

% vesting
(max 100%)

Total shares
vesting

Date of end of
performance period

Date of vesting

Share price of vesting
pence

TSR

TNAV

ROCE

TSR

30%

35%

30%

93.0%

64.3%

100%

67.8%

204,467

18 February 2019

164,927

30 September 2019

16 December 2019

256,330

30 September 2019

16 December 2019

148,942

30 September 2019

16 December 2019

307.00 1

300.87 2

1. The share price of 307 pence is the spot price of the shares on the vesting date of 18 February 2019.

2. The share price of 300.87 pence is the average of the share prices for the dealing days in the three months to 30 September 2019.

3. The vesting outcome of 77.9% relating to the December 2016 performance conditions was measured at 30 September 2019.

4. The overall vesting percentage for the December 2016 scheme was 77.9%.

Total pension entitlements (audited)
Executive Directors are eligible to participate in the Group’s pension plan, a defined contribution arrangement. Ian Sutcliffe does not participate in the
plan and receives cash in lieu of pension benefits. In respect of ongoing pension benefits, Ian Sutcliffe receives a salary supplement equal to 25% of
salary reduced for employer’s National Insurance contributions in lieu of pension. Rebecca Worthington was a member of the plan. Rebecca Worthington
received employer pension contributions of 17.5% of salary subject to personal contributions of 5% of salary until 17 April 2019. Mike Scott received
pension contributions and a salary supplement which were together equivalent to 10% of salary. A further sum of £21,000 was paid in the year by the
employer which was subject to personal contributions of 5% of salary and related to the previous year’s pensionable bonus. This was an entitlement
of his contractual arrangements prior to joining the Board on 1 October 2018.

None of the Executive Directors had a prospective entitlement to a defined benefit pension plan by reference to qualifying services.

86 Annual report 2019 / Countryside Properties PLC

Directors’ shareholdings (audited)
Under the terms of their service contracts, Executive Directors are required to hold shares in the Company to the value of 200% of annual salary
within five years of their appointment. Non-Executive Directors are expected to hold shares in the Company to the value of 50% of annual fee within
five years of their appointment. The beneficial interests of the Directors in office at the year end in the shares of the Company are shown below:

Director

Ian Sutcliffe

Mike Scott

David Howell

Amanda Burton

Baroness Morgan

Douglas Hurt

Simon Townsend

Total share
interests at
30 September
2019

5,249,254

388,635

47,000

10,767

9,444

11,600

10,000

Shares held,
including connected
persons, at
30 September
2019

3,850,558

36,009

47,000

10,767

9,444

11,600

10,000

Outstanding
LTIP share
awards at
30 September
2019

1,142,909

344,673

—

Outstanding
deferred share
bonus awards
at 30 September
2019

253,912

—

Outstanding
SAYE options at
30 September
2019

Shareholding
(excluding outstanding
LTIP and SAYE) as a
percentage of salary 1

G
o
v
e
r
n
a
n
c
e

1,875

7,953

—

2,526%

40%

90%

66%

63%

65%

67%

1. Assumes closing mid-market share price on 30 September 2019 of 336.0 pence per share.

There have been no movements in Directors’ shareholdings from the year end to the date of this report.

Rebecca Worthington – past Director’s shareholding

Director

Rebecca Worthington

Total share
interests at
termination
date

1,089,662

Shares held,
including connected
persons, at
termination
date

Outstanding
LTIP share
awards at
termination
date

Outstanding
deferred share
bonus awards
termination
date

Outstanding
SAYE options at
termination
date

626,170

309,543

153,909

—

Loss of office payments or payments to past Directors (audited)
As announced on 17 April 2019, Rebecca Worthington left Countryside Properties PLC, having stepped down from her role as Group Chief Operating
Officer and as a Director of the Company on 17 April 2019 (the “Termination Date”). Rebecca Worthington:

• received her basic salary and contractual benefits up to the Termination Date;

• post-termination up to 30 September 2019 continued to receive payments in lieu of her salary, car allowance and pension contributions during her

12-month notice period, paid in monthly instalments, which totalled £184,336;

• received the sum of £2,286 as a statutory redundancy payment;

• received £5,000 (plus VAT) which was paid directly to third-party providers to cover the cost of outplacement support;

• received £5,000 (plus VAT) which was paid directly to a third-party provider to cover legal fees incurred in obtaining advice in respect of the

termination of her employment with the Company;

• remained eligible for a bonus for the financial year ended 30 September 2019 pro-rated to reflect the period she served as a Director (i.e. up to the
Termination Date). £226,090 was payable, of which two-thirds will be paid in cash in December 2019 with the balance being deferred under the
Deferred Bonus Plan for three years; and

• after pro-rating holds the following outstanding employee share plan awards at 30 September 2019:

Plan

Deferred Bonus Plan

Long-Term Incentive Plan (“LTIP”)

Grant year

Award type

No. of Company shares
subject to award

Vesting year

2016

2017

2018

2016

2017

2018

Conditional award

Nil-cost option

62,016

45,447

46,446

208,531

77,394

23,618

2019

2020

2021

2019

2020

2021

“Good leaver” treatment has been afforded, meaning these awards (and the Deferred Bonus Plan award to be granted in December 2019) will remain
capable of vesting in accordance with their terms on their normal vesting dates. For the LTIP awards, vesting will be subject to the achievement by the
Company of applicable performance conditions and pro-rating to reflect the period from the award date to the termination date. To the extent it
vests, the 2018 LTIP award will be subject to a two-year holding period.

Countryside Properties PLC / Annual report 2019 87

Annual report on remuneration continued

Application of the Policy in 2020
Base salary
Salaries were reviewed with effect from 1 October 2019 with an increase of 3% awarded to the Group Chief Executive in line with the wider workforce.
Upon his appointment as Group CFO in October 2018, Mike Scott’s base salary was set at £300,000, below the Committee’s view of the market rate
for the role. To reflect his excellent performance in the role, the Committee agreed an increase to £350,000 from 1 October 2019. Subject to continued
performance and development in the year, a further increase to £400,000 is proposed from 1 October 2020. Once the realignment has been completed,
it is anticipated future increases will be in line with the general workforce.

Ian Sutcliffe

Mike Scott

2019

£546,000

£300,000

2020

% increase

£563,000

£350,000

3.1%

16.7%

Pension and benefits
As described in the Policy report, Ian Sutcliffe will receive a pension contribution of 25% and Mike Scott will receive a pension contribution of 10% of
base salary. No other elements of remuneration are pensionable.

Annual bonus
Executive Directors are eligible to receive up to 150% of base salary as an annual bonus. The metrics and their weightings for 2020 are as follows:

Metric

Group adjusted operating profit

Group adjusted operating margin

Group NHBC Recommend a Friend score

% of maximum bonus

Note: Details of the targets for each metric are commercially sensitive and will not be disclosed prospectively.

Long-Term Incentive Plan
The Committee intends to grant Mike Scott an award at a level of 200% of salary shortly after the announcement of the 2019 results. Following the
announcement that Ian Sutcliffe is to retire on 31 March 2020, he will not receive an award in December 2019. The proposed performance metrics
and their weightings are set out below:

Below threshold

Threshold

Target

Maximum

Adjusted basic
EPS (50%)

ROCE (50%)

3 year compound
adjusted basic
EPS growth

Pay-out
% of element

<4%

6.5%

9.0%

25%

50%

100%

<35.0

35.0

37.0

39.0

Pay-out
% of element

25%

50%

100%

For each performance condition, vesting occurs on a linear basis for performance between each point. ROCE performance is measured for the year
ending 30 September 2022. Adjusted basic EPS growth is measured over the three years ending 30 September 2022.

Fees for the Chairman and the Non-Executive Directors
During the year, a review of the Chairman’s fees was undertaken and it was deemed that a market adjustment was appropriate. As a result, the
Chairman received an increase of £25,000 in fees effective 1 October 2019, taking his basic fee to £200,000. Following a review of NED fees, the base
fees were deemed to be appropriate, and so remain unchanged. The £5,000 increment for Committee Chairmanship and the Senior Independent
Director was found to be below market median, and so this has been increased to £7,500. A summary of current annual fees is shown below:

Role

Chairman

Non-Executive Director

Additional fees:

Senior Independent Director

Audit Committee Chair

Remuneration Committee Chair

88 Annual report 2019 / Countryside Properties PLC

2019 fee
£’000

175

2020 fee
£’000

200

7.5

Percentage
change

14.3%

—

50%

Performance graph and table

200

175

150

125

100

16 Feb 2016

30 Sept 2016

30 Sept 2017

30 Sept 2018

30 Sept 2019

Countryside Properties

FTSE 250

G
o
v
e
r
n
a
n
c
e

As the Group is a member of the FTSE 250, management believes this to be a representative comparator for the Group.

Group Chief Executive pay table

Financial year

2019

2018

2017

Name

Ian Sutcliffe

Total remuneration
£’000

Annual bonus
as % of maximum

Vesting of LTIP
as % of maximum

2,653 1

2,196 2

1,418

69.1%

100%

77.9%

85.6% 3

Not relevant

1. The 2019 total remuneration includes the LTIP TSR element of the February 2016 award, which vested during the year.

2. The 2018 total remuneration has been restated to reflect the actual vesting price of the shares from the February 2016 Scheme, which vested in the current year.

3. The 2018 LTIP vesting percentage has been updated to reflect the finalisation of the TSR vesting percentage on 18 February 2019.

The annual change in base salary, benefits and annual variable pay is set out below. Annual variable pay includes vestings under the Group’s Long-Term
Incentive Plan relating to awards granted in February 2016 and December 2016. Excluding these amounts, annual variable pay for 2019 was £566,000
(2018: £795,000), a decrease of 29% on 2018.

Group Chief Executive1

Base salary

Benefits

Annual variable pay

Average of all employees1

Base salary

Benefits

Annual variable pay

2019
£’000

546

1,969

2018
£’000

530

1,532

1. All employees were awarded an average pay rise of 3% with effect from 1 October 2019.

The relative importance of remuneration in relation to other significant uses of the Group’s cash is outlined below:

Total staff costs

Dividend

Taxation paid

Interest paid

Change
%

—

(7)

(20)

(21)

2018
£m

124.9

41.1

22.7

3.2

2019
£m

131.6

56.0

27.9

3.8

Dilution
The Group’s share plans comply with the Investment Association’s guidelines on dilution limits of 5% in ten years for discretionary schemes and 10%
in ten years for all schemes. As at 30 September 2019, the Group had utilised 2.7% of the 10% in ten years limit and 2.0% of the 5% in ten years limit.

Countryside Properties PLC / Annual report 2019 89

Annual report on remuneration continued

Remuneration Committee
The Remuneration Committee assists the Board in fulfilling its responsibilities in relation to remuneration. This includes: making recommendations to
the Board on the Company’s policy on executive remuneration; setting the overarching principles, parameters and governance framework of the
Group’s Remuneration Policy; and determining the individual remuneration and benefits package of each of the Company’s Executive Directors.

The Remuneration Committee will also ensure compliance with the UK Corporate Governance Code in relation to remuneration. The UK Corporate
Governance Code provides that a Remuneration Committee should comprise at least three members who are independent Non-Executive Directors
(other than the Chairman).

Advisors
Aon plc provided independent advice to the Committee during the financial year, having been appointed by the Committee following an extensive
competitive tendering process, which included a review of services to be provided and associated fees, after the Group’s Listing in February 2016.
Aon has not provided any other services to the Company. The Committee is satisfied that the advice received from Aon in relation to executive
remuneration matters during the year was objective and independent. Terms of engagement are available on request from the Company Secretary.
Aon is a member of the Remuneration Consultants Group and abides by the Remuneration Consultants Group Code of Conduct, which requires
its advice to be objective and impartial. The fees paid to Aon for advice during the year were £84,814 (excluding VAT).

Statement of shareholder voting
Votes cast at the Annual General Meeting held on 24 January 2019 in respect of the Remuneration Report are shown below:

Remuneration Report

Total number
of votes

390,660,070

4,095,736

394,755,806

2,396

Percentage
of votes cast

98.96%

1.04%

100%

N/A

For

Against

Total

Withheld

Approval
This report and Policy was approved by the Board of Directors on 20 November 2019 and signed on its behalf by:

Amanda Burton
Chair of the Remuneration Committee
20 November 2019

90 Annual report 2019 / Countryside Properties PLC

Directors’ report

The Directors present their report and the audited ﬁnancial statements of Countryside
Properties PLC (the “Company”) and its subsidiaries (together, the “Group”) for the year
ended 30 September 2019.

The Directors’ Report comprises pages 91 to 93 of this Annual Report, in addition to the sections
incorporated by reference, including the Board biographies, the Corporate Governance Report,
the Audit Committee Report, the Nomination Committee Report and the Directors’
Remuneration Report.

In accordance with the UK Financial Conduct Authority’s Listing Rules (LR 9.8.4C), the information
to be included in the Annual Report and Accounts, where applicable, under LR 9.8.4, is set out
in this Directors’ Report.

General information
Countryside Properties PLC is a public limited
company, listed on the Main Market of the
London Stock Exchange, incorporated and
domiciled in the UK. The registered address
of the Company is Countryside House,
The Drive, Brentwood, Essex CM13 3AT.
The Company acts as the holding company
and ultimate parent for the Group. More
information on the Company, its financial
position and its financial statements can be
found on pages 140 to 148.

Principal activities and
Strategic Report
Countryside is a UK homebuilder and urban
regeneration partner, operating in locations
across London, the South East, the North
West of England, the Midlands and Yorkshire.
We operate through two divisions:
Housebuilding and Partnerships. Our Strategic
Report on pages 2 to 55 sets out detailed
information on the Group and its strategy, its
principal activities, the operation of the businesses,
and the results and ﬁnancial position for the year
ended 30 September 2019. Information on the
principal risks and uncertainties facing the Group,
trends and economic factors impacting the
business and likely future developments can
also be found in the Strategic Report.

Board changes
On 1 October 2018, Mike Scott joined the
Board as Group Chief Financial Officer and
Rebecca Worthington was appointed as Group
Chief Operating Officer. On 15 February 2019
we announced the appointment of Simon
Townsend as a Non-Executive Director of
the Company with effect from 1 March 2019.
Simon was subsequently appointed to each
of the Board’s Committees on 10 May 2019.
On page 64 we set out Simon’s induction
process. On 17 April 2019 we announced
that Rebecca Worthington was leaving the
Group and stepping down from her role as
Group Chief Operating Officer.

As reported on 21 November 2019, Ian Sutcliffe’s
last day as Group Chief Executive will be
31 December 2019, with Iain McPherson
being promoted to the role with effect from
1 January 2020.

For more details on the members of the Board,
see pages 58 and 59. The Corporate Governance
Report on pages 62 to 66 gives more information
on how the Board functioned during the year.

Directors’ interests
The Directors’ interests in the shares and share
options of the Company are shown on page 87
of the Directors’ Remuneration Report.

Significant contractual agreements
We do not consider that the Group is
dependant upon any particular customer or
supplier contract or other arrangement that is
essential to the Group. Countryside has a
£300m revolving credit facility which expires in
May 2023.

Significant agreements – change
of control
Upon a change of control of the Company, a
number of signiﬁcant agreements alter or
terminate as follows:

• Revolving credit facility: Under the terms of
the £300m revolving credit facility, which
expires in May 2023, provided by a syndicate
of banks to Countryside Properties, the
lenders may, following such change in control,
elect to continue to provide such facility, or
alternatively cancel it and require all monies
borrowed under such facility to be repaid.

• Directors and employees: There are no
agreements between the Company and
its Directors or employees providing
for compensation for loss of ofﬁce or
employment that occurs because of a
takeover bid or change of control.

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Equal opportunities
The Group is committed to employment policies
which follow best practice based on equal
opportunities for all employees, irrespective
of gender, race, nationality, colour, disability,
marital status, sexual orientation, age or
religion. All decisions relating to employment
practices are objective, free from bias and
based upon work criteria and individual merit.
The Group’s policy is to offer appropriate
training and career development to disabled
persons that are, as far as possible, identical to
other employees and in line with best practice.
In the event of a member of staff becoming
disabled, the Group makes every effort to
continue employment, arrange appropriate
retraining and offer opportunities for promotion.
For more information on our diversity statistics,
please refer to the Our People section on
page 39.

Engagement with employees
The Group systematically provides employees
with information on matters of concern to them,
consulting them or their representatives regularly
so that their views can be taken into account
when the Group makes decisions likely to
affect their interests. During the year we have
appointed Baroness Sally Morgan to represent
the “employee voice” as a Non-Executive
Director on the Board.

We encourage employee involvement in the
Group; a common awareness of the financial
and economic factors affecting the Group on
the part of all employees plays a major role in
maintaining the Group’s customer-focused
approach. For more information on how the
Group engages its employees, refer to page 38
of this report. For more information on how
employees can participate in the Group’s
performance through membership of the
Long-Term Incentive Plan and Save As You Earn
employee share plans, refer to pages 135 and
136 of the report.

Engagement with other
key stakeholders
It is critical for the success of the Group that it
engages with all of its key stakeholders, seeks
their views and takes into consideration their
interests as part of its decision-making process.
On pages 14 to 17 of this report we set
out the ways in which we engage with key
stakeholders, what they are telling us and how
that has been taken into account in the Board’s
decision-making process.

Countryside Properties PLC / Annual report 2019 91

Substantial shareholdings
At 15 November 2019, being the latest practicable date prior to the publication of this Annual
Report, the Company has been notified of the following interests amounting to 3% or more of
the voting rights in the issued share capital of the Company:

Interest in Countryside

Standard Life Aberdeen

Aviva Investors

M&G Investment Management Ltd

Ruffer

Invesco

Blackrock Inc

Blackrock (Transitional Manager)

The Vanguard Group

Kames Capital

JO Hambro Capital Management

15.50%

10.67%

6.94%

5.64%

5.28%

4.19%

3.95%

3.83%

3.71%

3.04%

Shareholders are again reminded to check their
position regarding any dividend mandates in
place, should they either wish to participate
in the DRIP or discontinue or change their
participation. Existing mandates will apply to
all dividend payments unless or until revoked.

The Trustee of the Company’s Employee
Benefit Trust has waived the right to receive
any dividend over the shares held by that Trust.

Power of the Directors
Subject to the Company’s Articles of Association,
the Companies Act and any directions given by
the Company by special resolution, the business
of the Company will be managed by the Board,
which may exercise all powers of the Company.

Directors’ indemnities
By means of a Deed of Indemnity entered into
separately by the Company and each Director,
there is a qualifying third-party indemnity
provision (as per the Companies Act 2006).
This provides, for the ﬁnancial year ended
30 September 2019 and as at the date of this
document, that the Company may pay for
Directors’ indemnities out of its own assets.
The Company has obtained directors’ and
ofﬁcers’ insurance for this purpose.

Share capital
At the date of this report, 450,000,000
ordinary shares (the same number as at
admission to the London Stock Exchange)
of £0.01 each have been issued, are fully paid
up and are admitted to trading on the London
Stock Exchange. The Company’s Articles of
Association, copies of which can be obtained
from the Company’s website, set out the rights
and obligations attaching to the Company’s
ordinary shares, as well as the powers of the
Company’s Directors.

We provide details of employee share plans in
Note 30 to the Group financial statements.

Purchase of the Company’s
own shares
At the 2019 AGM, shareholders approved
a resolution permitting the Company to make
purchases of its own shares up to a maximum
of 45,000,000 ordinary shares (representing 10%
of the issued share capital at 12 December 2018).
This resolution remains in force until the
conclusion of the 2020 AGM. The Company has
made no purchases of its own shares to date.

The Company will seek to renew this authority
at the 2020 AGM.

Directors’ report continued

Policy on financial instruments
The policy on ﬁnancial instruments is covered
in the accounting policy (Note 3) to the
ﬁnancial statements. The Notes to the financial
statements include the Company’s policies and
processes for managing its capital; its financial
risk management objectives; details of its
financial instruments and hedging activities; and
its exposures to credit risk and liquidity risk.

Independent auditor
The Board is satisfied that
PricewaterhouseCoopers LLP (“PwC”)
remained independent for the purpose
of the 2019 audit.

Corporate governance
A report on Countryside’s corporate governance
framework, together with how we comply
with the principles and provisions of the UK
Corporate Governance Code, can be found in
the Corporate Governance Report on pages 62
to 66. This forms part of this Directors’ Report
and is incorporated into it by cross-reference.

Political contributions
The Group does not make political contributions.

Dividend
The Directors recommend the payment of a
final dividend of 10.3 pence (2018: 6.6 pence)
per ordinary share, taking the total dividend
for 2019 to 16.3 pence per ordinary share
(2018: 10.8 pence). If approved by shareholders
at the Annual General Meeting, this will be paid
on 7 February 2020 to those shareholders
on the register at the close of business on
20 December 2019.

The Company will continue to operate a
Dividend Reinvestment Plan (“DRIP”), further
details of which can found on our website at
https://investors.countrysideproperties.com/
shareholder-information/dividend-information.
The DRIP will operate automatically in respect
of the 2019 final dividend for those shareholders
who have previously registered a DRIP mandate
(unless changed beforehand by shareholders).
It will also operate in respect of all future
dividends, until such time as each participating
shareholder elects to withdraw from the DRIP
or the DRIP is suspended or terminated in
accordance with its terms and conditions.
The Board will continue to keep the availability
of the DRIP under regular review.

92 Annual report 2019 / Countryside Properties PLC

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Parent company financial
position
As at 30 September 2019, the parent company
had net assets of £588.2m and net current
liabilities of £138.8m. The parent company’s
ability to continue as a going concern is
inextricably linked to the results of the Group
as a whole. Having considered the Group’s cash
flow forecasts, the Directors are satisfied that
the parent company has sufficient liquidity and
covenant headroom to enable the parent
company to meet its liabilities as they fall due
for at least the next 12 months.

Carbon emissions
We set out details of the Group’s approach
to the environment, including information in
relation to its carbon emissions, in the section
headed Environment on pages 46 to 48. This
forms part of the Sustainability Report section
of the Annual Report on pages 41 to 48.

Annual General Meeting
The 2020 Annual General Meeting of the
Company will be held at the offices of
Linklaters LLP, One Silk Street, London
EC2Y 8HQ, at 1.00 pm on 23 January 2020.
The notice convening the meeting, together
with details of the business to be considered
and explanatory notes, is distributed separately
to shareholders. It is also available on
our website.

By order of the Board

Gary Whitaker
Company Secretary
20 November 2019

Authority to allot shares
At the 2019 AGM, shareholders approved a
resolution permitting the Directors to allot
shares up to an aggregate nominal value of
£1,500,000. Shareholders also approved a
resolution authorising the Directors to allot
shares up to a further aggregate nominal
amount of £1,500,000 in connection with
a rights issue. As at 20 November 2019,
the Directors had not used these authorities,
which will remain in force until the conclusion
of the 2020 AGM.

The Company will seek to renew this authority
at the 2020 AGM.

Statement of disclosure of
information to the auditor
Each Director of the Company confirms that,
as far as each is aware, there is no relevant
audit information of which the Company’s
auditor is unaware and that each of the
Directors has taken all the steps they ought
to have taken individually as a Director to
make themselves aware of any relevant audit
information and to establish that the Company’s
auditor is aware of that information.

Going concern
The Group’s business activities, together with
the factors likely to affect its future development,
are set out in the Strategic Report on pages 2
to 55. The financial position of the Group, its
cash flows, liquidity position and borrowing
facilities are described on pages 34 to 37 of the
Strategic Report. Further disclosures regarding
borrowings are provided in Note 21.

As described in the Viability Statement, the
Directors have assessed the prospects and
viability of the Company over a three-year
period to September 2022. The Board has
performed a robust assessment of the principal
risks facing the Company, including those risks
that would threaten Countryside’s business model,
future performance, solvency or liquidity.

Having considered the Group’s cash flow
forecasts, the Directors are satisfied the Group
has sufficient liquidity and covenant headroom
to enable the Group to conduct its business
and meet its liabilities as they fall due for at
least the next 12 months. Accordingly, these
financial statements are prepared on a going
concern basis.

The Directors’ Viability Statement is in the
Strategic Report on page 53.

Countryside Properties PLC / Annual report 2019 93

Statement of Directors’ responsibilities
In respect of the financial statements

The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.

The Directors are responsible for the
maintenance and integrity of the parent company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination of
financial statements may differ from legislation
in other jurisdictions.

The Directors consider that the Annual Report
and Accounts, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Group
and parent company’s performance, business
model and strategy.

Each of the Directors, whose names and functions
are listed in the Board of Directors section,
confirms that, to the best of their knowledge:

• the parent company financial statements,
which have been prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102
“The Financial Reporting Standard applicable
in the UK and Republic of Ireland”, and
applicable law), give a true and fair view of
the assets, liabilities, financial position and
loss of the Company;

• the Group financial statements, which have
been prepared in accordance with IFRSs as
adopted by the European Union, give a true
and fair view of the assets, liabilities, financial
position and profit of the Group; and

• the Directors’ Report includes a fair review
of the development and performance of the
business and the position of the Group and
parent company, together with a description
of the principal risks and uncertainties that it
faces.

By order of the Board

Ian Sutcliffe
Group Chief Executive
20 November 2019

Mike Scott
Group Chief Financial Officer
20 November 2019

Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have prepared
the Group financial statements in accordance
with International Financial Reporting Standards
(“IFRSs”) as adopted by the European Union
and parent company financial statements in
accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102
“The Financial Reporting Standard applicable in
the UK and Republic of Ireland”, and applicable
law). Under company law the Directors must
not approve the financial statements unless
they are satisfied that they give a true and fair
view of the state of affairs of the Group and
parent company and of the profit or loss of
the Group and parent company for that
period. In preparing the financial statements,
the Directors are required to:

• select suitable accounting policies and then

apply them consistently;

• state whether applicable IFRSs as adopted

by the European Union have been followed
for the Group financial statements and
United Kingdom Accounting Standards,
comprising FRS 102, have been followed for
the Company financial statements, subject to
any material departures disclosed and
explained in the financial statements;

• make judgements and accounting estimates

that are reasonable and prudent; and

• prepare the financial statements on the

going concern basis unless it is inappropriate
to presume that the Group and parent
company will continue in business.

The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Group and parent
company’s transactions and disclose with
reasonable accuracy at any time the financial
position of the Group and parent company
and enable them to ensure that the financial
statements and the Directors’ Remuneration
Report comply with the Companies Act 2006
and, as regards the Group financial statements,
Article 4 of the IAS Regulation.

The Directors are also responsible for
safeguarding the assets of the Group and parent
company and hence for taking reasonable steps
for the prevention and detection of fraud and
other irregularities.

94 Annual report 2019 / Countryside Properties PLC

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Independent auditor’s report

To the members of Countryside Properties PLC

Report on the audit of the financial statements
Opinion
In our opinion:

• Countryside Properties PLC’s Group financial statements and Parent company financial statements (the “financial statements”) give a true and fair

view of the state of the Group’s and of the Parent company’s affairs as at 30 September 2019 and of the Group’s profit and cash flows for the year
then ended;

• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted

by the European Union;

• the Parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and
applicable law); and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial

statements, Article 4 of the IAS Regulation.

We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated and Parent company statements
of financial position as at 30 September 2019; the Consolidated statement of comprehensive income, the Consolidated cash flow statement, and
the Consolidated and Parent company statements of changes in equity for the year then ended; the accounting policies; and the notes to the
Consolidated and Parent company financial statements.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs
(UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group
or the Parent company.

Other than those disclosed in note 7 to the financial statements, we have provided no non-audit services to the Group or the Parent company in the
period from 1 October 2018 to 30 September 2019.

Our audit approach
Context
Countryside Properties PLC is a British housebuilder and urban regeneration company listed on the London Stock Exchange. The Group is wholly
UK based, operating in London and the South East of England, and in the Midlands, Yorkshire and North West of England through its Partnerships division.

The Group is susceptible to external macro-economic factors such as government regulation, mortgage availability and changes in the wider building sector
such as customer demand, supply chain availability and build cost inflation. This is particularly relevant for our work in the areas of margin forecasting and
the valuation of inventory.

Countryside Properties PLC / Annual report 2019 95

Independent auditor’s report continued

To the members of Countryside Properties PLC

Report on the audit of the financial statements continued
Our audit approach continued
Overview

Materiality

• Overall Group materiality: £11.0 million (2018: £9.8 million), based on 5% of profit before tax,

adjusted for non-underlying items.

• Overall Parent company materiality: £8.0 million (2018: £8.0 million), based on 1% of total

assets, restricted to an amount below the Group overall materiality.

• The Group operates in two divisions, Partnerships and Housebuilding, as set out in the Annual

Report (refer to pages 26 to 33). Each of the divisions is broken down into a number of
reporting units which are consolidated into the Group financial statements along with central
reporting entities.

Audit scope

• We performed audit work over the complete financial information of 31 reporting units,

including central reporting entities and the Parent company which accounted for 92 per cent of
the Group’s revenues and 82 per cent of the Group’s profit before tax, adjusted for non-
underlying items.

• We also performed audit work over material revenue and inventory balances outside of these

31 reporting units. Together, this accounted for 97 per cent of the Group’s revenues and 92 per
cent of the Group’s profit before tax, adjusted for non-underlying items.

Key audit
matters

• Cost forecast and margin estimates (Group).

• Land and inventory valuation (Group).

• Commercial land transactions (Group).

• Finalisation of acquisition accounting – Westleigh (Group).

• Recoverability of investments (Parent).

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.

Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to
the acts by the Group which were contrary to applicable laws and regulations including fraud and we considered the extent to which non-compliance
might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation
of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of
the financial statements (including the risk of override of controls), and determined that the principal risks were related to inflated revenue and profit.
Audit procedures performed included: review of the financial statement disclosures to underlying supporting documentation, review of correspondence
with and reports to the regulators, review of correspondence with legal advisors, enquiries of management and review of internal audit reports in
so far as they related to the financial statements, and testing of journals and evaluating whether there was evidence of bias by the Directors that
represented a risk of material misstatement due to fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from
the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.

Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.

96 Annual report 2019 / Countryside Properties PLC

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Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters continued

Key audit matter

How our audit addressed the key audit matter

Cost forecast and margin estimates (Group)
Refer to Note 3 (Accounting policies) and Note 2 (Critical accounting judgements
and estimates).

The Group’s margin recognition framework is based on the margin forecast for each
site. These margins, which drive the recognition of costs as each unit is sold, reflect
estimated selling prices and costs for each development. This process is effectively a
method of allocating the total forecast costs, representing both land and build costs
of a development, over each individual unit.

There is a risk that the margin forecast for the site and the margin subsequently
recognised on each unit sale is not appropriate and reflective of the actual final profit
margin that will be recognised on a development.

We consider the appropriate margin recognition across the life of the site to be the
most significant financial reporting risk for the Group, principally due to the high level
of management judgement involved in the accounting for the Group’s developments
given that sales prices and build costs are inherently uncertain and are influenced by
changes in external market factors, such as the availability of mortgages and build
cost inflation.

Land and inventory valuation (Group)
Refer to Note 3 (Accounting policies) and Note 2 (Critical accounting judgements
and estimates).

Inventory is comprised of land held for development, work in progress, raw materials
and completed units/part-exchanged properties.

Inventory is the most significant balance in the consolidated statement of financial
position and is held at the lower of cost and net realisable value (‘NRV’) being the
margin the development is forecast to make over its lifecycle based upon forecast
sales prices and build costs.

The NRV of each development is forecast and monitored as described in the “Cost
forecast and margin estimates” key audit matter above and is therefore subject to the
same key assumptions. Due to the influence of the same external factors and the
cyclical nature of the housing industry, with periodic downturns in customer demand,
there is a risk that the calculation of a development’s NRV may be subject to
estimation error, leading to inventory being held at an incorrect value and an
unrecorded impairment charge.

We obtained an understanding of management’s process for preparing a site forecast and
evaluated management’s controls over cost forecasting and changes to forecasts.

We tested management’s controls over the approval of initial forecasts as well as the controls
over the regular updating of forecasts. In response to costs not having been appropriately
recognised within the Manchester region as reported at the half year, we also attended an
increased number of management’s monthly cost review meetings which gave us additional
evidence over the robustness of the forecasting process across the Group. We held
discussions with management to understand the status and progress of a sample of sites and
tested that the explanations received were consistent with the latest management forecast.

Our substantive procedures focused on sites that generated significant revenue in the year
and we:

• assessed the appropriateness of a sample of underlying assumptions within the forecasts,

including sales prices and costs which have a significant impact on the site forecasts;

• assessed management’s historical forecasting accuracy on completed sites in FY19,

understanding the reasons and testing, where appropriate, differences from the FY18
forecast margin;

• tested a sample of forecast sales prices to the actual sales price attained for similar properties
to support the validity of the estimated sales price in the forecast; and tested a sample of
costs incurred to third-party support to assess the completeness and accuracy of the
costs. We also recalculated the forecast margin.

We performed specific audit procedures in response to the impairment of inventory as a
result of costs not being appropriately recognised in the Manchester region. This included
procedures to verify that this was isolated to the Manchester region and that the forecast
costs to complete had been appropriately reflected at the year end.

Based on the procedures performed, we did not identify any sites where we considered the
forecast margin to be inappropriate.

We obtained an understanding of management’s process for preparing a site forecast.

We understood and evaluated management’s controls over the cost forecasting process and
tested the key controls over the approval of the initial forecasts and the monitoring of
updates required to the forecasts over the course of a site’s life.

We considered margins for all material sites to identify those with low or eroding margins,
due to specific issues or underperformance. We discussed these sites with management,
including considering the level of provisions, if any, held against these sites and corroborated
the explanations with available external evidence.

We obtained an analysis of the composition of the inventory balance, specifically the level of
completed but unreserved units, to understand if completed stock is held at the appropriate
carrying value.

We also assessed the historical accuracy of management’s forecasting on completed sites in
FY19, understanding the reasons and testing, where appropriate, differences to the forecast margin.

For sites with a provision, we compared the inventory valuation with the forecast NRV.

Based on the procedures performed, we did not identify any sites where we determined
additional impairments were required, above those already recorded by management.

Commercial land transactions (Group)
Refer to Note 3 (Accounting policies).

We held discussions with management to understand the substance of material commercial
land transactions.

The Group has entered into a number of commercial land transactions during the
year. The nature of these transactions can be complex and bespoke.

Where applicable, we read the relevant extracts from management’s papers on the
proposed accounting treatment of the transactions.

Due to their complex nature, we focused on this area to ensure that the accounting
reflected the underlying agreements.

We substantively tested material or complex land acquisitions and disposals through
examination of contracts and agreements to check that the transaction and subsequent
overage terms had been identified and accounted for appropriately, and that all the related
liabilities had been properly recorded in the financial statements.

We assessed the accounting treatment of the transactions against IFRS 15 as applicable.

We were satisfied that management had appropriately accounted for these transactions.

Countryside Properties PLC / Annual report 2019 97

Independent auditor’s report continued

To the members of Countryside Properties PLC

Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters continued

Key audit matter

How our audit addressed the key audit matter

Finalisation of acquisition accounting – Westleigh (Group)
The Group completed the acquisition of Westleigh Group Limited, a Partnerships
house builder, headquartered in Leicester, on 12 April 2018.

The Group Financial Statements within the 2018 Annual Report presented provisional
accounting for the acquisition, based on an assessment of fair values that was underway
at that time. The Directors’ assessment of the fair values of Westleigh’s assets and
liabilities has now concluded within the measurement period, as defined by IFRS 3.
As a result, during 2019, goodwill relating to Westleigh has increased by £10.0m to
£72.0m, primarily due to the fair value of inventories being reduced by £8.9m.

This change has been reflected in the comparative presentation of the Consolidated
Statement of Financial Position as at 30 September 2018, with no change to reported
results or cash flows. There were no other changes to goodwill during the period.

We read the technical papers prepared by management in respect of the acquisition and
inspected relevant contracts and information.

During 2018 we challenged the methodology and assumptions used in determining the
brand, customer relationships and order book value and there has been no change in
the assessment.

During 2019 management has finalised the fair value calculation of the inventory and
other balance sheet items. We have tested a sample of the adjustments and understood
management’s rationale for adjustments made.

Based upon the above, we are satisfied that the Directors have made appropriate
adjustments in finalising the acquisition accounting of Westleigh Group Limited.

Recoverability of investments
(Parent)

The Parent company holds investments in its subsidiaries totalling £727 million. We
focused on this area due to the size of the investment balance as there is a risk of
material misstatement if the underlying investments are under-performing.

We obtained management’s assessment of the carrying value of the investments. We agreed
the cash flow forecast used in the assessment to formally approved forecasts.

We assessed key assumptions within management’s forecasts.

We performed a sensitivity analysis over key assumptions, including the discount and growth rates.

We did not identify any exceptions in our audit procedures.

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the Group and the Parent company, the accounting processes and controls, and the industry in which they operate.

The Group is comprised of two divisions, Housebuilding and Partnerships. Each of the divisions is broken down into a number of reporting units
(which also include joint ventures and an associate) which are consolidated into the Group financial statements, along with the centralised functions.

The reporting units vary in size and we identified 31 reporting units, including centralised functions and the Parent company which required an audit of
their complete financial information due to their individual size. These 31 reporting units were all audited by the Group engagement team and, where
applicable, included the audit of the joint ventures and the associate. The reporting units where we performed an audit of the complete financial
information accounted for 82 per cent of the Group’s profit before tax, adjusted for non-underlying items and 92 per cent of the Group’s revenue.

We also performed audit work over material revenue and inventory balances outside of these 31 reporting units. Together, this accounted for 97 per cent
of the Group’s revenues and 92 per cent of the Group’s profit before tax, adjusted for non-underlying items. Our audit work at these reporting units,
together with the additional procedures performed at Group level on the consolidation, goodwill, joint ventures, tax, the acquisition of the Westleigh
Group, and share based payments, gave us the evidence we needed for our opinion on the Group and Parent company financial statements as a whole.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative
considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements

Parent company financial statements

Overall materiality

£11.0 million (2018: £9.8 million).

£8.0 million (2018: £8.0 million).

How we determined it

5% of profit before tax, adjusted for non-underlying items. 1% of total assets, restricted to an amount below the

Rationale for
benchmark applied

Based on our professional judgement, we determined
materiality by applying a benchmark of 5% of profit
before tax, adjusted for non-underlying items.
We believe that underlying profit before tax is the
most appropriate measure as it eliminates any
disproportionate effect of non-underlying charges
and credits and provides a consistent year-on-year
basis for our work.

Group overall materiality.

We believe that total assets is the primary measure used
by the shareholders in assessing the position of the
entity, and is an accepted auditing benchmark.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality
allocated across components was £0.03 million and £8.0 million. Certain components were audited to a local statutory audit materiality that was also
less than our overall Group materiality.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £500,000 (Group audit)
(2018: £500,00) and £500,000 (Parent company audit) (2018: £500,00) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.

98 Annual report 2019 / Countryside Properties PLC

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Report on the audit of the financial statements continued
Our audit approach continued

Going concern
In accordance with ISAs (UK) we report as follows:

Reporting obligation

Outcome

We are required to report if we have anything material to add or
draw attention to in respect of the Directors’ statement in the financial
statements about whether the Directors considered it appropriate to
adopt the going concern basis of accounting in preparing the financial
statements and the Directors’ identification of any material uncertainties
to the Group’s and the Parent company’s ability to continue as a going
concern over a period of at least twelve months from the date of
approval of the financial statements.

We have nothing material to add or to draw attention to.

As not all future events or conditions can be predicted, this statement is
not a guarantee as to the Group’s and Parent company’s ability to continue
as a going concern. For example, the terms on which the United Kingdom
may withdraw from the European Union are not clear, and it is difficult to
evaluate all of the potential implications on the Group’s trade, customers,
suppliers and the wider economy.

We are required to report if the Directors’ statement relating to
Going Concern in accordance with Listing Rule 9.8.6R(3) is materially
inconsistent with our knowledge obtained in the audit.

We have nothing to report.

Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report based on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006
have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06), ISAs (UK) and
the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters as described below (required by
ISAs (UK) unless otherwise stated).

Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the
year ended 30 September 2019 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. (CA06)

In light of the knowledge and understanding of the Group and Parent company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and Directors’ Report. (CA06)

The Directors’ assessment of the prospects of the group and of the principal risks that would threaten the solvency or liquidity
of the group
We have nothing material to add or draw attention to regarding:

• The Directors’ confirmation on page 53 of the Annual Report that they have carried out a robust assessment of the principal risks facing the Group,

including those that would threaten its business model, future performance, solvency or liquidity.

• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.

• The Directors’ explanation on page 53 of the Annual Report as to how they have assessed the prospects of the Group, over what period they have

done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.

We have nothing to report having performed a review of the Directors’ statement that they have carried out a robust assessment of the principal risks
facing the Group and statement in relation to the longer-term viability of the Group. Our review was substantially less in scope than an audit and only
consisted of making inquiries and considering the Directors’ process supporting their statements; checking that the statements are in alignment with
the relevant provisions of the UK Corporate Governance Code (the “Code”); and considering whether the statements are consistent with the
knowledge and understanding of the Group and Parent company and their environment

Countryside Properties PLC / Annual report 2019 99

Independent auditor’s report continued

To the members of Countryside Properties PLC

Other Code Provisions
We have nothing to report in respect of our responsibility to report when:

• The statement given by the Directors, on page 94, that they consider the Annual Report taken as a whole to be fair, balanced and understandable,
and provides the information necessary for the members to assess the Group’s and Parent company’s position and performance, business model
and strategy is materially inconsistent with our knowledge of the Group and Parent company obtained in the course of performing our audit.

• The section of the Annual Report on pages 68 to 71 describing the work of the Audit Committee does not appropriately address matters

communicated by us to the Audit Committee.

• The Directors’ statement relating to the Parent company’s compliance with the Code does not properly disclose a departure from a relevant

provision of the Code specified, under the Listing Rules, for review by the auditors.

Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. (CA06)

Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors Responsibilities, the Directors are responsible for the preparation of the financial statements in
accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend
to liquidate the Group or the Parent company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only for the Parent company’s members as a body in accordance with Chapter 3 of
Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, 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.

Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the Parent company, or returns adequate for our audit have not been received from branches

not visited by us; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

• the Parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the

accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 19 November 2015 to audit the financial statements
for the year ended 30 September 2016 and subsequent financial periods. The period of total uninterrupted engagement is four years, covering the
years ended 30 September 2016 to 30 September 2019.

John Waters (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
20 November 2019

100 Annual report 2019 / Countryside Properties PLC

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Consolidated statement of comprehensive income

For the year ended 30 September 2019

Revenue

Cost of sales

Gross profit

Administrative expenses

Operating profit

Analysed as:

Adjusted operating profit

Less: share of joint ventures and associate operating profit

Less: non-underlying items

Operating profit

Finance costs

Finance income

Share of post-tax profit from joint ventures and associate

Profit before income tax

Income tax expense

Profit for the year

Profit is attributable to:

– Owners of the parent

– Non-controlling interest

Other comprehensive income/(expense)

Items that may be reclassified to profit and loss:

– Increase in the fair value of available for sale financial assets

Items reclassified to profit and loss:

– Reclassification of available for sale reserve to profit and loss

Total comprehensive income for the year

Total comprehensive income for the year attributable to:

– Owners of the parent

– Non-controlling interest

Earnings per share (expressed in pence per share):

Basic

Diluted

Revenue and operating profits arise from the Group’s continuing operations.

Note

2019
£m

1,237.1

(983.5)

2018
£m

1,018.6

(788.9)

253.6

(83.2)

170.4

234.4

(46.8)

(17.2)

170.4

(11.9)

1.0

44.1

203.6

(35.2)

168.4

167.7

0.7

168.4

—

168.4

167.7

0.7

168.4

37.7

37.3

229.7

(80.4)

149.3

211.4

(46.4)

(15.7)

149.3

(12.0)

1.4

42.0

180.7

(32.1)

148.6

147.9

0.7

148.6

0.1

(0.4)

148.3

147.6

0.7

148.3

33.1

32.6

15, 16

Countryside Properties PLC / Annual report 2019 101

Consolidated statement of financial position

As at 30 September 2019

Assets

Non-current assets

Intangible assets

Property, plant and equipment

Investment in joint ventures

Investment in associate

Financial assets at fair value through profit or loss

Deferred tax assets

Trade and other receivables

Current assets

Inventories

Financial assets at fair value through profit or loss

Trade and other receivables

Cash and cash equivalents

Total assets

Liabilities

Current liabilities

Trade and other payables

Current income tax liabilities

Provisions

Non-current liabilities

Borrowings

Trade and other payables

Deferred tax liabilities

Provisions

Total liabilities

Net assets

Equity

Share capital

Reserves

Equity attributable to owners of the parent

Equity attributable to non-controlling interest

Total equity

The Group’s financial position as at 30 September 2018 has been restated, as described in Note 3.

The notes on pages 105 to 139 form part of these financial statements.

These financial statements were approved by the Board of Directors on 20 November 2019.

On behalf of the Board

Ian Sutcliffe
Director

Mike Scott
Director

102 Annual report 2019 / Countryside Properties PLC

Note

2019
£m

2018
restated
£m

170.9

12.8

62.2

3.5

—

5.3

15.2

269.9

808.6

5.0

232.8

75.6

1,122.0

179.5

7.7

62.5

5.4

4.1

9.3

21.8

290.3

740.8

—

165.9

47.2

953.9

1,391.9

1,244.2

(322.6)

(24.7)

(1.8)

(349.1)

(2.2)

(130.0)

(10.9)

(0.6)

(143.7)

(492.8)

899.1

4.5

892.3

896.8

2.3

899.1

(317.6)

(18.7)

(4.2)

(340.5)

(2.2)

(93.8)

(12.9)

(1.1)

(110.0)

(450.5)

793.7

4.5

787.6

792.1

1.6

793.7

Consolidated statement of changes in equity

For the year ended 30 September 2019

Note

Share
capital
£m

4.5

Retained
earnings
£m

Available for sale
reserve
£m

Equity
attributable to
owners of the
parent
£m

Non-controlling
interest
£m

684.8

0.3

689.6

At 1 October 2017

Comprehensive income

Profit for the year

Other comprehensive expense

Total comprehensive income

Transactions with owners

Share-based payments, net of deferred tax

18, 30

Purchase of shares by Employee Benefit Trust

Dividends paid

Total transactions with owners

At 30 September 2018

Comprehensive income

Profit for the year

Total comprehensive income

Transactions with owners

Share-based payments, net of deferred tax

18, 30

Purchase of shares by Employee Benefit Trust

Dividends paid

Total transactions with owners

At 30 September 2019

—

4.5

—

4.5

147.9

—

147.9

7.4

(11.4)

(41.1)

(45.1)

787.6

167.7

6.0

(13.0)

(56.0)

(63.0)

892.3

—

(0.3)

—

147.9

(0.3)

147.6

7.4

(11.4)

(41.1)

(45.1)

792.1

167.7

6.0

(13.0)

(56.0)

(63.0)

896.8

Total
equity
£m

690.5

148.6

(0.3)

148.3

7.4

(11.4)

(41.1)

(45.1)

793.7

168.4

6.0

(13.0)

(56.0)

(63.0)

899.1

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0.7

—

0.7

—

1.6

0.7

—

2.3

Countryside Properties PLC / Annual report 2019 103

Note

15, 16

2019
£m

86.9

(3.8)

(27.9)

55.2

(3.1)

(7.8)

—

0.3

—

6.8

—

2.9

43.1

42.2

(56.0)

(13.0)

—

(69.0)

28.4

47.2

75.6

2018
£m

111.4

(3.2)

(22.7)

85.5

(1.4)

(5.3)

4.8

—

(39.9)

(71.2)

11.5

(3.2)

12.1

26.9

(65.7)

(41.1)

(11.4)

125.0

(125.0)

2.5

(50.0)

(30.2)

77.4

47.2

Consolidated cash flow statement

For the year ended 30 September 2019

Cash generated from operations

Interest paid

Tax paid

Net cash inflow from operating activities

Cash flows from investing activities

Purchase of intangible assets

Purchase of property, plant and equipment

Proceeds from disposal of available for sale financial assets

Proceeds from disposal of property, plant and equipment

Acquisition of subsidiary (net of cash acquired)

Funding to settle subsidiary’s net debt on acquisition

Repayment of advances to joint ventures and associate

Investment in new joint ventures

Repayment of members’ interest

Dividends received from joint ventures and associate

Net cash inflow/(outflow) from investing activities

Cash flows from financing activities

Dividends paid

Purchase of shares by Employee Benefit Trust

Borrowings under revolving credit facility

Repayment of borrowings under revolving credit facility

Proceeds from other borrowings

Net cash outflow from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

104 Annual report 2019 / Countryside Properties PLC

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Notes to the consolidated financial statements

For the year ended 30 September 2019

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.

The parent company financial statements are on pages 140 to 145.

2. Critical accounting judgements and estimates
The preparation of the Group’s financial statements under International Financial Reporting Standards (“IFRS”), as adopted by the European Union,
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.

Critical accounting judgements
In the process of applying the Group’s accounting policies, which are described in Note 3, the Directors have made no individual judgements that have
a significant impact on the financial statements, apart from those involving estimates which are described below.

Key sources of estimation uncertainty
Estimates and underlying assumptions affecting the financial statements are based on historical experience and other relevant factors and are reviewed
on an ongoing basis. This approach forms the basis of making judgements about carrying values of assets and liabilities that are not readily apparent
from other sources. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based or
as a result of new information. Such changes are recognised in the year in which the estimate is revised.

The key sources of estimation uncertainty that have a risk of causing a material adjustment to the carrying value of assets and liabilities are described
below.

Estimation of site profitability
In order to determine the profit or loss that the Group recognises on its developments and construction contracts in a specific period, the Group
allocates the total cost of each development or construction contract between the proportion completing in the period and the proportion to
complete in a future period. The assessment of the total costs to be incurred requires a degree of estimation due to the long-term nature of the
Group’s activities and because actual costs are subject to market fluctuations. Group management has established internal controls to review and
ensure the appropriateness of estimates made on an individual development or contract basis. No individual development or contract is sufficiently
large that a plausible change in estimates would result in a material change to the Group’s results. However, a change in estimated margins on several
sites (due, for example, to changes in estimates of cost inflation or a material reduction in house prices in the private market) could materially alter
future profitability. As an illustration, a reasonably possible change in margins of 5% across all sites in 2019 would have reduced gross profit and net
assets by an estimated £60m, or £70m on an adjusted basis.

3. Accounting policies
Basis of preparation
These financial statements for the year to 30 September 2019 are those of the Company and all of its subsidiaries. They have been prepared in
accordance with IFRS as adopted by the European Union, IFRS Interpretations Committee (“IFRS IC”) interpretations and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.

These financial statements have been prepared on a going concern basis in Sterling and rounded to the nearest £0.1m under the historical cost convention,
except for financial assets at fair value through profit or loss, share-based payments and certain other assets and liabilities recognised at fair value in
business combinations.

Prior year restatement
During the prior financial year, the Group acquired 100% of Westleigh Group Limited (“Westleigh”). The fair values of acquired net assets have been
finalised during the year and the statement of financial position as at 30 September 2018 restated accordingly, as required by IFRS 3 “Business
Combinations”. There was no change to the reported financial performance or cash flows of the Group. Refer to Note 14 for further detail.

Going concern
The Group’s business activities, together with the factors likely to affect its future development, are set out in the Strategic Report on pages 2 to 33.
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described on pages 34 to 37 of the Strategic Report.
Further disclosures regarding borrowings are provided in Note 21.

As described in the Viability Statement on page 53, the Directors have assessed the prospects and viability of the Company over a three-year period
to September 2022. The Board has performed a robust assessment of the principal risks facing the Company, including those risks that would threaten
Countryside’s business model, future performance, solvency or liquidity.

The Board has also performed a further assessment of the Group’s going concern status over the next 12 months. Having considered the Group’s
cash flow forecasts, the Directors are satisfied that the Group has sufficient liquidity and covenant headroom to conduct its business and meet its
liabilities as they fall due for at least 12 months from the date of these financial statements. Accordingly, these financial statements have been prepared
on a going concern basis.

Countryside Properties PLC / Annual report 2019 105

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

3. Accounting policies continued
Adoption of new and revised accounting standards
During the financial year ended 30 September 2019, the Group adopted the following standards and amendments issued by the International
Accounting Standards Board (“IASB”):

• IFRS 9 “Financial Instruments”;

• IFRS 15 “Revenue from Contracts with Customers”;

• Amendments to IFRS 2 “Share-based Payment” regarding the classification and measurement of share-based payment transactions; and

• Annual Improvements to IFRSs 2014–2016 Cycle.

Information on the initial application of IFRS 9 and IFRS 15, including the impact on the financial position and performance of the Group, has been
disclosed in Note 36. The adoption of the other amendments in the year did not have any impact on the financial statements.

Standards, interpretations and amendments in issue but not yet effective
IFRS 16 “Leases” has been issued, and is effective for the Group for the financial year ending 30 September 2020. IFRS 16 addresses the definition,
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. The standard replaces IAS 17 “Leases” and related interpretations.

IFRS 16 requires lessees to recognise right of use assets and lease liabilities on the statement of financial position for all leases, except short-term and
low value asset leases. At commencement of the lease, the lease liability equals the present value of future lease payments, and the right of use asset
equals the lease liability, adjusted for payments already made, lease incentives, initial direct costs and any provision for dilapidation costs.

For operating leases entered into prior to the adoption of IFRS 16, the rental charge is replaced by depreciation of the right of use asset and interest
on the lease liability. IFRS 16 therefore results in an increase to operating profit, which is reported prior to interest being deducted. Depreciation is
charged on a straight line basis; however, as interest is charged on outstanding lease liabilities it reduces over the life of the lease. As a result, the impact
on profit before tax is highly dependent on lease maturity.

The Group has carried out a detailed exercise to determine the impact of IFRS 16 on the Group’s financial position and performance based on the
lease commitments of the Group as at 30 September 2019.

The Group will adopt the modified retrospective approach to transition, applying the practical expedients available under this approach. A right of use
asset of around £35m will be recognised on the statement of financial position with a corresponding lease liability recognised of the same value. There
will therefore be no impact on net assets on transition to IFRS 16.

The approximate impact on operating profit for the financial year ending 30 September 2020 is an increase of c.£1m with a small reduction in profit
before tax after the unwind of the discount on the lease liability through finance costs.

The following amendments to standards and interpretations have also been issued, but are not yet effective and have not been early adopted for the
financial year ended 30 September 2019:

• Annual Improvements to IFRSs 2015–2017 Cycle;

• Amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” regarding

the definition of material; and

• Amendments to IAS 28 “Investments in Associates and Joint Ventures” regarding long-term interests in associates and joint ventures.

The adoption of these amendments is not expected to have a material impact on the Group.

Basis of consolidation
Subsidiaries are entities which the Group has the power to control. The Group controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to govern the financial and operating policies so as to obtain economic benefits
from its activities. The financial statements of subsidiaries are consolidated in the Group financial statements using the acquisition method of accounting
from the date on which control is obtained up until the date that control ceases.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the statement of comprehensive income, the statement of
changes in equity and the statement of financial position.

Where the accounting policies of a subsidiary or equity-accounted investee do not conform in all material respects to those of the Group, adjustments
are made on consolidation to reflect the accounting policies of the Group.

Intragroup transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated in preparing the financial
statements. Gains arising from transactions with joint arrangements and associates are eliminated as described below.

Joint ventures and associates
Where the Group collaborates with other entities on a development or contract, a judgement is made of the nature of the relationship. Where there
is joint control (as described by IFRS 11), the arrangement is classified as a joint arrangement and accounted for using the equity method (for joint
ventures) or on the basis of the Group’s proportional share of the arrangement’s assets, liabilities, revenues and costs (for joint operations).
The Group’s joint ventures are disclosed in Note 15.

An associate is an entity over which the Group is in a position to exercise significant influence but does not exercise control or joint control.
Investments in associates are accounted for using the equity method. The Group’s associates are disclosed in Note 16.

106 Annual report 2019 / Countryside Properties PLC

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3. Accounting policies continued
Joint ventures and associates continued
Under the equity method of accounting, interests in joint ventures and associates are initially recognised at cost and adjusted thereafter to recognise
the Group’s share of profits or losses and movements in other comprehensive income. When the Group’s share of losses in a joint venture or associate
equals or exceeds its interests in the joint venture or associate, the Group does not recognise further losses, unless it has incurred obligations or made
payments on behalf of the joint venture or associate.

Unrealised losses arising on transactions between the Group and its joint ventures and associates are eliminated unless the transaction provides
evidence of an impairment of the asset transferred.

The Group funds its joint ventures and associates through a combination of equity investments and shareholder loans. The Directors review the
recoverability of investments and shareholder loans for impairment annually. Where an investment is held in a joint venture or associate which has net
liabilities, the investment is held at £Nil and other long-term interests, such as shareholder loans, are reduced by the value equal to the net liabilities,
unless the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture or associate.

Purchase of shares by Employee Benefit Trust
From time to time, the Employee Benefit Trust (“EBT”) purchases shares of the Company in order to hold an appropriate level of shares towards the
future settlement of outstanding share-related incentives on behalf of the Group. The EBT is funded directly by the Group. The EBT waives its dividend
and voting rights in respect of the shares it holds. The purchase value of EBT shares is charged to retained earnings.

Business combinations
All acquisitions are accounted for using the acquisition method of accounting. The cost of an acquisition is the aggregate of the fair values of the assets
transferred, liabilities incurred or assumed and equity instruments issued at the date of acquisition. The consideration transferred includes the fair value
of the asset or liability resulting from a deferred or contingent consideration arrangement, unless that arrangement is dependent on continued
employment of the beneficiaries.

The identified assets and liabilities are measured at their fair value at the date of acquisition. The excess of consideration over the Group’s share of the
fair value of the total identifiable net assets acquired is recorded as goodwill.

Costs directly relating to an acquisition are expensed to the statement of comprehensive income.

Intangible assets
Goodwill
Goodwill recognised on acquisition of a subsidiary represents the excess of consideration over the Group’s share of the fair value of the total
identifiable net assets acquired. If the total consideration transferred is less than the fair value of the net assets acquired, the difference is recognised
directly in the statement of comprehensive income.

An impairment review is carried out annually or when circumstances arise that may indicate an impairment is likely. The carrying value of goodwill is
compared to its recoverable amount, being the higher of its value in use and its fair value less costs of disposal. Any impairment is charged immediately
to the statement of comprehensive income and is not subsequently reversed.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (“CGUs”), or
groups of CGUs, that are expected to benefit from the synergies of the combination. Each CGU or group of CGUs to which the goodwill is allocated
represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.

Brands
The Group carries assets on the statement of financial position for brands that have been acquired. Internally generated brands are not recognised.
Cost is determined at acquisition as being directly attributable cost or, where relevant, by using an appropriate valuation method. The assets are tested
for impairment when a triggering event is identified and are amortised over a period of between five and twenty years.

Customer-related assets
The Group carries customer-related intangible assets on the statement of financial position resulting from acquisitions. Internally generated relationships
are not recognised. These assets are recognised at fair value. The assets are tested for impairment when a triggering event is identified and are
amortised over a period of between two and a half and ten years.

Computer software
Computer software that generates an economic benefit of greater than one year is recognised as an intangible asset and carried at cost less
accumulated amortisation. Computer software costs that are recognised as assets are amortised on a straight line basis over their economic useful life
of either four or five years. These are reviewed for impairment at such time as there is a change in circumstances due to which the carrying value may
no longer be recoverable.

Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any applicable impairment losses.

Depreciation is charged at rates to write off the cost of the asset (to its residual value) on a straight line basis over the estimated useful life of the asset.
The applicable annual rates are:

• Plant and machinery

20% to 25%

• Fixtures and fittings

10%

The Group does not own any land or buildings considered to be non-trade related.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Countryside Properties PLC / Annual report 2019 107

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

3. Accounting policies continued
Financial assets
The Group classifies its financial assets in the following categories:

• financial assets at amortised cost; and

• financial assets at fair value through profit or loss.

The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets
at initial recognition. Financial assets are derecognised only when the contractual rights to the cash flows from the financial assets expire or when the
Group is no longer considered to have control over the assets.

Financial assets at amortised cost
Financial assets at amortised cost are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for those with maturities greater than 12 months after the end of the reporting period. These are classified
as non-current assets. The Group’s financial assets at amortised cost comprise “trade and other receivables” and “cash and cash equivalents” in the
statement of financial position.

Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are non-derivative assets that are either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months
of the end of the reporting period.

Changes in the fair value of financial assets at fair value through profit or loss are recorded in the statement of comprehensive income.

Inventories
Inventories are normally stated at cost (or fair value if acquired as part of a business combination) and held at the lower of cost or net realisable value.
Costs comprise direct materials, applicable direct labour and those overheads incurred to bring the inventories to their present location and condition.
Net realisable value represents estimated selling price less all estimated costs to sell, including sales and marketing costs.

Land options purchased are initially stated at cost. Option costs are written off on a straight line basis over the remaining life of the option and are also
subject to impairment review. Impairment reviews are performed when circumstances arise which indicate an impairment is likely, such as a refusal of
planning permission. Any impairments are recognised immediately in the statement of comprehensive income. Upon exercise, the unamortised balance
of an option is included within the value of inventory.

Land inventory is recognised when the Group obtains control of the land, which is considered to be on unconditional exchange of contracts.
Where land is purchased on deferred payment terms, a corresponding liability is recognised within trade and other payables.

Pre-contract expenditure is capitalised into inventories where it is probable that a contract will be signed or otherwise is recognised as an expense
within costs of sales in the statement of comprehensive income.

Provisions for inventories are made, where appropriate, to reduce the value of inventories and work in progress to their net realisable value.

Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less any provision for impairment.

The Group applies the simplified approach under IFRS 9 to measure expected credit losses (“ECL”) associated with trade receivables. The carrying
value of the receivable is reduced at each reporting date for any increase in the lifetime ECL, with an impairment loss recognised in the statement
of comprehensive income.

If collection is expected in one year or less, receivables are classified as current assets. If not, they are classified as non-current assets.

Where land is sold on deferred payment terms, the revenue and associated receivable are discounted to their fair value. The discount to fair value is
amortised over the period to the settlement date and credited to finance income using the effective interest rate method. Changes in estimates of the
final amount due are recognised in revenue in the statement of comprehensive income.

Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other short-term deposits held by the Group with maturities of three months
or less. Bank overdrafts are classified within current liabilities.

Trade payables
Trade payables on normal terms are not interest bearing and are stated initially at their fair value and subsequently amortised cost.

Where land is purchased on deferred payment terms, the land and associated liability are discounted to their fair value. The discount to fair value is
amortised over the period of the credit term and charged to finance costs using the effective interest rate method. Changes in estimates of the final
payment due are capitalised into inventories and, in due course, to cost of sales in the statement of comprehensive income.

Trade payables also includes overage payable where the Group is committed to make contractual payments to land vendors related to the performance
of the development in the future. Overage payable is estimated based on expected future cash flows in relation to relevant developments and, where
payment will take place in more than one year, is discounted.

Deposits received from customers relating to sales of new properties are classified within current trade payables.

Trade payables are classified as current liabilities if payment is due within one year or less. If not, they are classified as non-current liabilities.

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3. Accounting policies continued
Borrowings
Interest-bearing bank loans and overdrafts are recorded initially at their fair value and bank loans are reported net of direct transaction costs to the
extent that borrowings are available for offset. Such instruments are subsequently carried at amortised cost and finance charges, including premiums
payable on settlement or redemption, are amortised over the term of the instrument using the effective interest rate method. The excess of unamortised
borrowing costs is disclosed within prepayments.

Bank loans are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after
the date of the statement of financial position. Overdrafts are classified as current liabilities.

Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event which is probable to result in an outflow of economic
benefits that can be reliably estimated. Where the effect of the time value of money is material, the provision is discounted at the pre-tax discount rate
that reflects the risks specific to the liability. Provisions for onerous leases are recognised when the foreseeable net cash outflows on a lease exceed the
benefits derived from the lease which has more than one year before expiring or option to exercise a break.

Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in share premium as a deduction
from the proceeds.

Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Revenue
Revenue comprises the fair value of the consideration received or receivable, net of applicable Value-Added Tax, Stamp Duty Land Tax, rebates and
discounts and after eliminating sales within the Group.

The Group’s two divisions – Partnerships and Housebuilding – operate a range of legal and contractual structures which are tailored to the land structure
and parties to the contract. Recognition of revenue reflects the underlying nature of these contracts, as described below in more detail by category.
We generically refer to our arrangements with housing associations and local authorities as “partnerships”, but this should not be taken to mean these
arrangements are accounted for as joint arrangements or take the legal form of partnerships (see policy on joint ventures and associates above).

Private housing
Revenue is recognised in the statement of comprehensive income at a point in time on legal completion as this is when the customer obtains control
of the property. Revenue is recognised at the fair value of the consideration received.

Cash is received by the Group on legal completion and there is no variable or financing component to the consideration received.

Part exchange
In certain instances, property may be accepted as part consideration in the sale of a Countryside property. The fair value of the part exchange
property is established by independent surveyors and reduced for costs to sell. The sale of the Countryside property is recorded in line with the
accounting policy for private housing described above, with the fair value of the part exchange property replacing cash receipts.

The subsequent sale of the part exchange property is treated as a separate transaction with revenue recognised in line with the treatment of private
housing described above. The proceeds are presented in private revenue in Note 6.

Cash incentives
Cash incentives are considered to be a discount from the purchase price offered to the acquirer and are therefore accounted for as a reduction
to revenue.

Affordable housing and PRS contracts
Contract revenue for affordable housing and PRS contracts is recognised over time based on surveyor-certified valuations of work performed at the
balance sheet date. As the build progresses, customer-controlled assets are created, with the design tailored to the specification of the customer. The
Group has an enforceable right to be paid for the work completed to date and invoices are issued and paid over the life of the development.

Variations in contract work and claims are included to the extent that it is highly probable that there will not be a significant reversal when the value
of such payments are finalised.

Where progress towards the satisfaction of performance obligations cannot be reasonably determined, revenue is recognised over time as the work is
performed to the extent that costs have been incurred and are expected to be recoverable. Contract costs are recognised as expenses in the period
in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately
in the statement of comprehensive income within cost of sales.

Countryside Properties PLC / Annual report 2019 109

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

3. Accounting policies continued
Revenue continued
Land sales
Revenue is recognised in the statement of comprehensive income at a point in time on unconditional exchange of contracts as this is the point at
which the Group is considered to have satisfied its performance obligations. Revenue is measured as the fair value of consideration received or receivable.

Where there are residual obligations in the land sale contract that are not satisfied at the balance sheet date, an element of the transaction price is
deferred into future periods. If the stand-alone selling price of the residual obligations is not directly observable, the transaction price is derived by
calculating a value for the land element of the contract and deducting this from the total transaction price. The remainder is allocated to the residual
obligations. Revenue is recognised on the residual obligations at a point in time when the performance obligations have been satisfied.

Cash is either received on completion or on deferred settlement terms. Where land is sold on deferred settlement terms the revenue and associated
receivable are discounted to their fair value. The discount to fair value is amortised over the period to the settlement date and credited to finance
income using the effective interest rate method. Changes in estimates of the final amount due are recognised in revenue in the statement of
comprehensive income.

Commercial sales
Revenue is typically recognised in the statement of comprehensive income at a point in time on unconditional exchange of contracts as this is the point
at which the Group is considered to have satisfied its performance obligations. Cash is received on legal completion and in most cases there is no
variable or financing component to the consideration received.

In some cases, where longer-term performance obligations are present, for example design and build contracts, revenue is recognised over time as
described above in “Affordable housing and private rented sector contracts”. Revenue is measured as the fair value of consideration received or receivable.

Project management services
Revenue earned for the provision of project management services, typically to the Group’s joint ventures and associates, are recognised on an accruals
basis in line with the underlying contract.

Cost of sales
The Group determines the value of inventories charged to cost of sales based on the total forecast margin of developing a site or a phase of a site.
Once the total expected margin of the site or phase of a site is established it is allocated based on revenue to calculate a build cost per plot. These
costs are recognised within cost of sales when the related revenue (private, affordable or PRS contracts) is recognised in accordance with the Group’s
revenue recognition policy.

To the extent that additional costs or savings are identified and the expected margin changes as the site progresses, the change is recognised over the
remaining plots.

Cost of sales for land and commercial property which form part of a larger site are recognised based on forecast site margin as described above. Where
land and commercial property relates to the entirety of a site, cost of sales represents the carrying value of the related inventory in the Group’s statement
of financial position and is recognised within cost of sales when revenue is recognised in accordance with the Group’s revenue recognition policy.

Leases
Where a significant portion of the risks and rewards of ownership are retained by the lessor, leases are classified as operating leases.

Rentals payable and incentives receivable under operating leases are recognised on a straight line basis over the term of the relevant lease.

Finance costs and finance income
Borrowing costs
Borrowing costs in relation to the Group’s debt facility are recognised on an accruals basis. Also included in borrowing costs is the amortisation of fees
associated with the arrangement of the financing. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are
accounted for on an accruals basis in the statement of comprehensive income using the effective interest method and are added to the carrying amount of
the instrument to the extent that they are not settled in the period in which they arise.

The Group capitalises borrowing costs into developments only where project-specific debt is used.

Unwind of discounting
The finance costs and income associated with the time value of money on discounted payables and receivables is recognised within finance costs and
income as the discount unwinds over the life of the relevant item.

Current and deferred income taxation
Income tax comprises current and deferred tax.

Current taxation
The current taxation payable is based on taxable profit for the period which differs from accounting profit as reported in the statement of comprehensive
income because it excludes items of income or expense that are taxable or deductible in other years and those items never taxable or deductible.
The Group’s liability for current tax is measured using tax rates that have been enacted or substantively enacted by the reporting date.

110 Annual report 2019 / Countryside Properties PLC

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3. Accounting policies continued
Current and deferred income taxation continued
Deferred taxation
Deferred taxation is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial
statements and their corresponding tax values used in the computation of taxable profit, and is accounted for using the balance sheet liability method.

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction which affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that
have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited in the statement of comprehensive income, except
when it relates to items credited or charged directly to the statement of changes in equity, in which case the deferred tax is also dealt with in equity.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when the Group intends to settle the balances on a net basis.

Segmental reporting
Segmental reporting is presented in the financial statements in respect of the Group’s business segments. Segmental reporting reflects the Group’s
management structure and primary basis of internal reporting.

Segmental results include items directly attributable to the segment, as well as those that can be allocated on a reasonable basis.

The chief operating decision maker (“CODM”) has been identified as the Group’s Executive Committee. The CODM reviews the Group’s internal
reporting in order to assess performance and allocate resources. The CODM assesses the performance of the operating segments based on adjusted
operating profit, return on capital employed (“ROCE”) and tangible net asset values (“TNAV”).

Pension plans
The Group operates a defined contribution pension plan. A defined contribution plan is a pension plan under which the Group pays fixed
contributions to a separate entity.

The Group has no further payment obligations once the contributions have been paid. The contributions are recognised on an accruals basis as
employee benefit expenses.

Share-based payments
The Group provides benefits to employees of the Group, including Directors, in the form of equity-settled share-based awards, whereby employees render
services in exchange for rights over shares. For equity-settled share-based payments, the fair value of the employee services rendered is determined by
reference to the fair value of the shares awarded or options granted, excluding the impact of any non-market vesting conditions. All share options are
valued using an option-pricing model (Black Scholes or Monte Carlo). This fair value is charged to the statement of comprehensive income over the
vesting period of the share-based awards.

The Company recharges its subsidiary undertakings an amount equivalent to the fair value of the grant of options over its equity instruments to the
employees of subsidiaries. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the
vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

The Group does not operate any cash-settled share-based payment plans.

Non-underlying items
Certain items which do not relate to the Group’s underlying performance are presented separately in the 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 nature, size or incidence in
order to obtain a clear and consistent presentation of the Group’s underlying business performance. As these non-underlying items can vary
significantly from year to year, they create volatility in reported earnings.

In addition, the Directors believe that in discussing the performance of the Group, the results of joint ventures and associates should be proportionally
consolidated, including the Group’s share of revenue and operating profit given their importance to the Group’s operations.

As such, the Directors adjust for the above in the calculation of the Group’s Alternative Performance Measures (“APMs”), which are set out on
pages 146 to 147.

Examples of material and non-recurring items which may give rise to disclosure as non-underlying items are:

• costs incurred directly in relation to business combinations or capital market transactions including advisory costs, one-off integration costs and

employment-related deferred consideration costs;

• adjustments to the statement of financial position that do not relate to trading activity such as the recognition and reversal of non-trade impairments;

• accelerated write off of unamortised issue costs on the re-financing of borrowings; and

• the costs of Group restructuring exercises.

In addition, the amortisation of acquisition-related intangible assets is treated as a non-underlying item as management does not believe this cost should
be included when considering the underlying trading performance of the Group.

Dividends
Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Dividends payable are recorded in the period in which they are approved or paid, whichever is earliest.

Countryside Properties PLC / Annual report 2019 111

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

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 CODM. The Group’s two business segments are Partnerships and
Housebuilding; these are described below and in more detail in the Strategic Report, in particular on pages 26 to 33.

The Partnerships division 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 division 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 both the Countryside and Millgate brands.

Segmental adjusted operating profit and segmental operating profit include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Central head office costs are allocated between the segments where possible, or otherwise allocated between the
segments using a percentage of units sold basis.

Segmental TNAV and tangible net operating asset value (“TNOAV”) include items directly attributable to the segment as well as those that can be
allocated on a reasonable basis, with the exception of intangible assets and net cash or debt.

Adjusted revenue, adjusted operating profit, TNAV and TNOAV are Alternative Performance Measures (“APMs”) for the Group. Further detail on
APMs is provided on pages 146 to 147.

Countryside operates entirely within the United Kingdom.

(a) Segmental financial performance

Year ended 30 September 2019

Adjusted revenue

Less: share of revenue from joint ventures and associate

Revenue

Adjusted operating profit/(loss)

Less: share of operating profit from joint ventures and associate

Less: non-underlying items (Note 7)

Operating profit/(loss)

Year ended 30 September 2018

Adjusted revenue

Less: share of revenue from joint ventures and associate

Revenue

Adjusted operating profit/(loss)

Less: share of operating profit from joint ventures and associate

Less: non-underlying items (Note 7)

Operating profit/(loss)

Partnerships
£m

Housebuilding
£m

Group items
£m

Total
£m

837.1

(44.8)

792.3

127.8

(13.3)

(7.4)

107.1

585.7

(140.9)

444.8

114.8

(33.5)

—

81.3

—

(8.2)

—

(9.8)

(18.0)

Partnerships
£m

Housebuilding
£m

Group items
£m

634.8

(44.5)

590.3

110.6

(9.5)

—

101.1

594.7

(166.4)

428.3

109.6

(36.9)

—

72.7

—

(8.8)

—

(15.7)

(24.5)

1,422.8

(185.7)

1,237.1

234.4

(46.8)

(17.2)

170.4

Total
£m

1,229.5

(210.9)

1,018.6

211.4

(46.4)

(15.7)

149.3

112 Annual report 2019 / Countryside Properties PLC

4. Segmental reporting continued
(b) Segmental financial position
Segmental 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. TNOAV is the Group’s measure of capital employed, as used in the calculation of ROCE.

Partnerships
£m

Housebuilding
£m

Group items
£m

TNAV at 30 September 2018 (restated)

Operating profit/(loss)

Add back items with no impact on TNAV:

– Share-based payments, net of deferred tax

– Amortisation of intangible assets

Other items affecting TNAV:

– Share of post-tax profit from joint ventures and associate

– Dividends paid

– Taxation

– Purchase of shares by EBT

– Other

TNAV at 30 September 2019

Inter-segment cash funding/(net cash)

Segmental capital employed (TNOAV)

TNAV as at 30 September 2018 has been restated, as described in Note 14.

54.2

107.1

—

13.3

(29.5)

(18.5)

(6.8)

(5.6)

114.2

62.6

176.8

565.9

81.3

—

30.8

(26.5)

(16.7)

(6.2)

(5.0)

623.6

(136.0)

487.6

—

(18.0)

6.0

11.7

—

0.3

—

Total
£m

620.1

170.4

6.0

11.7

44.1

(56.0)

(35.2)

(13.0)

(10.3)

737.8

(73.4)

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—

664.4

Year ended 30 September 2019

Investment in joint ventures

Investment in associate

Share of post-tax profit from joint ventures and associate

Capital expenditure – property, plant and equipment

Capital expenditure – software

Depreciation and amortisation

Share-based payments

Year ended 30 September 2018

Investment in joint ventures

Investment in associate

Share of post-tax profit from joint ventures and associate

Capital expenditure – property, plant and equipment

Capital expenditure – software

Depreciation and amortisation

Share-based payments

Partnerships
£m

Housebuilding
£m

Group items
£m

17.4

—

13.3

5.0

0.2

1.5

—

44.8

3.5

30.8

2.8

—

0.7

—

2.9

11.7

6.7

Partnerships
£m

Housebuilding
£m

Group items
£m

13.6

—

9.6

4.5

—

0.7

—

48.9

5.4

32.4

0.8

—

0.4

—

1.4

6.6

6.8

Total
£m

62.2

3.5

44.1

7.8

3.1

13.9

6.7

Total
£m

62.5

5.4

42.0

5.3

1.4

7.7

6.8

Countryside Properties PLC / Annual report 2019 113

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

5. Employees and Directors
(a) Staff costs for the Group during the year

The aggregate remuneration for the employees and Directors of the Group comprised:

Wages and salaries

Social security costs

Other pension costs

Share-based payments (Note 30)

2019
£m

108.6

11.2

5.1

6.7

131.6

2018
£m

100.0

11.3

6.8

124.9

The average monthly number of employees (including Directors) for the year for each of the Group’s principal activities was as follows:

Development

Head office

2019
Number

2018
Number

1,674

177

1,851

1,388

169

1,557

(b) Retirement benefits
All the Group’s employees are entitled to join the Group’s defined contribution schemes, which are invested with Aegon. Annual contributions to these
plans expensed in the statement of comprehensive income amounted to £5.1m (2018: £6.8m), of which £0.7m (2018: £0.5m) was outstanding as at
30 September 2019. The Group does not operate any defined benefit pension schemes.

Aggregate emoluments

(d) Emoluments of the highest paid Director

Aggregate emoluments

2019
£m

4.3

2019
£m

2.3

2018
£m

3.7

2018
£m

2.3

(e) Key management compensation
The following table details the aggregate compensation expensed in respect of the members of the Board of Directors and of the Executive Committee.

Salaries and bonus

Retirement benefits

Share-based payments

The disclosures of shares granted under the long-term incentive schemes are included in Note 30.

2019
£m

7.2

0.3

3.5

11.0

2018
£m

6.7

0.5

1.6

8.8

114 Annual report 2019 / Countryside Properties PLC

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6. Revenue
An analysis of Group reported revenue by type is set out below:

Partnerships:

– Private

– Affordable

– PRS

– Other

Housebuilding:

– Private

– Affordable

– PRS

– Other

Total

2019
£m

355.2

243.1

167.1

26.9

792.3

312.2

70.1

15.4

47.1

444.8

2018
£m

336.7

122.2

94.5

36.9

590.3

332.2

62.3

—

33.8

428.3

1,237.1

1,018.6

At 30 September 2019, the aggregate amount of revenue allocated to unsatisfied performance obligations was £893.5m (2018: £596.9m). The reasons
for the increase in the forward order book are discussed in the Strategic Report. Approximately half of these amounts will be recognised within one
year with the remainder recognised over varying contractual lengths.

7. Group operating profit
(a) Group operating profit is stated after charging/(crediting)

Inventories expensed to cost of sales

Staff costs

Amortisation of intangible assets

Depreciation of property, plant and equipment

Net provisions against inventories

Impairment of inventories

Operating leases

Auditor’s remuneration

During the year the Group obtained the following services from the Group’s auditor:

Fees payable to Group’s auditor and its associates for the audit of parent and consolidated financial statements

Fees payable to Group’s auditor and its associates for other services:

– Audit of subsidiary companies

– Audit of joint ventures and associate (Group share)

– Audit-related services

Note

2019
£m

964.9

131.6

11.7

2.2

(0.5)

7.4

7.7

0.7

2019
£m

0.2

0.3

0.1

0.7

2018
£m

780.6

124.9

6.6

1.1

2.1

—

6.3

0.5

2018
£m

0.1

0.2

0.1

0.5

Countryside Properties PLC / Annual report 2019 115

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

7. Group operating profit continued
(b) Non-underlying items

Non-underlying items included within cost of sales:

– Impairment of inventories

Non-underlying items included within administrative expenses:

– Amortisation of acquisition-related intangible assets

– Acquisition and integration costs relating to the Westleigh acquisition

– Deferred consideration relating to the Westleigh acquisition

Total non-underlying items

2019
£m

(7.4)

(10.2)

(1.8)

2.2

(17.2)

2018
£m

—

(5.6)

(2.7)

(7.4)

(15.7)

Impairment of inventories
During the year, a non-cash charge of £7.4m was recognised to impair the value of inventories in the Group’s Manchester region. This is the result
of costs accrued over a four-year period not being appropriately recognised in the statement of comprehensive income. The Directors have taken
appropriate steps to rectify this and to ensure the issue was contained in this region, including the appointment of Deloitte LLP to assist in the
investigation. Disciplinary action has been taken against the members of staff involved.

The amount has been excluded from adjusted operating profit on the basis of its size and non-recurring nature in the year. In accordance with IAS 8
“Accounting Policies, Changes in Accounting Estimates and Errors”, as the amount is not material either individually or in aggregate in preceding financial
years, it has not required the restatement of prior years’ financial statements.

Amortisation of acquisition-related intangible assets
Amortisation of acquisition-related intangible assets is reported within non-underlying items as management does not believe this cost should be
included when considering the underlying trading performance of the Group.

Acquisition and integration costs relating to the Westleigh acquisition
During the prior financial year, the Group incurred advisory costs relating to the acquisition of Westleigh and subsequent integration costs. During the
year ended 30 September 2019, further integration costs have been incurred, including those of property moves and employee severance. No further
integration costs will be included in non-underlying items after 30 September 2019.

Deferred consideration relating to the Westleigh acquisition
As part of the agreement to purchase Westleigh, deferred consideration is payable to management who remained with the Group post-acquisition.
These costs are being accrued over the period to March 2020 with changes to the estimated amount payable recognised in the statement of
comprehensive income.

Taxation
A total tax credit of £3.4m (2018: £2.4m) in relation to all of the above non-underlying items was included within taxation in the statement of
comprehensive income.

8. Finance costs

Bank loans and overdrafts

Unwind of discount

Amortisation of debt finance costs

Unwind of discount relates to land purchases on deferred payment terms.

Note

2019
£m

3.4

7.9

0.6

11.9

2018
£m

3.3

8.1

0.6

12.0

116 Annual report 2019 / Countryside Properties PLC

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9. Finance income

Interest receivable

Unwind of discount

Unwind of discount relates to land sales on deferred settlement terms.

10. Income tax expense

Analysis of charge for the year

Current tax

Current year

Adjustments in respect of prior periods

Total current tax

Deferred tax (Note 18)

Origination and reversal of temporary differences

Adjustments in respect of prior periods

Total deferred tax

Total income tax expense

2019
£m

0.6

0.4

1.0

2019
£m

33.9

—

33.9

1.3

—

1.3

35.2

2018
£m

0.1

1.3

1.4

2018
£m

33.7

(0.1)

33.6

(1.6)

0.1

(1.5)

32.1

Changes to the UK corporation tax rates were substantively enacted as part of the Finance Bill 2016 on 15 September 2016. These include reductions
to the main rate to 19.0% from 1 April 2017 and to 17.0% from 1 April 2020. This will reduce the Group’s future tax charge accordingly. Deferred taxes
at the balance sheet date have been measured using the enacted rates that are expected to apply to the unwind of each asset or liability.

The Group effective tax rate for the year of 17.3% (2018: 17.8%) is lower (2018: lower) than the standard rate of corporation tax in the United Kingdom,
which is 19.0% (2018: 19.0%).

The table below shows the reconciliation of profit before tax to the income tax expense.

Profit before income tax

Tax calculated at the parent entity rate of tax: 19.0% (2018: 19.0%)

Adjustments to deferred tax due to reduction in UK tax rates

Income not taxable

Expenses not deductible for tax

Deferred tax (charged)/credited directly to reserves

Enhanced deductions for land remediation

Other timing differences

Associate and joint venture tax

Income tax expense

2019
£m

203.6

38.7

—

(0.3)

0.1

(0.7)

(0.2)

(2.2)

35.2

2018
£m

180.7

34.3

0.8

—

0.4

0.6

(0.5)

(0.6)

(2.9)

32.1

Countryside Properties PLC / Annual report 2019 117

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

11. Earnings per share
Basic and diluted earnings per share are calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number
of ordinary shares in issue.

(a) Basic and diluted earnings per share

Profit from continuing operations attributable to equity holders of the parent (£m)

Basic weighted average number of shares (millions)

Basic earnings per share (pence per share)

Diluted weighted average number of shares (millions)

Diluted earnings per share (pence per share)

2019

167.7

445.1

37.7

450.1

37.3

2018

147.9

447.5

33.1

453.6

32.6

The basic weighted average number of shares of 445.1 million (2018: 447.5 million) excludes the weighted average number of shares held in the EBT
during the year of 4.9 million (2018: 2.5 million).

(b) Adjusted basic and diluted earnings per share
Adjusted basic and diluted earnings per share are APMs for the Group. Refer to page 146.

Adjusted earnings exclude non-underlying items from Group profit as presented below:

Profit from continuing operations attributable to equity holders of the parent (£m)

Add: non-underlying items net of tax (£m)

Adjusted profit from continuing operations attributable to equity holders of the parent (£m)

Basic weighted average number of shares (millions)

Adjusted basic earnings per share (pence per share)

Diluted weighted average number of shares (millions)

Adjusted diluted earnings per share (pence per share)

2019

167.7

13.8

181.5

445.1

40.8

450.1

40.3

Non-underlying items net of tax include costs of £17.2m, net of tax of £3.4m (2018: costs of £15.7m, net of tax of £2.4m).

12. Intangible assets

Cost

At 1 October 2017

Acquired in business combinations (restated)

Additions

At 30 September 2018 (restated)

Additions

At 30 September 2019

Accumulated amortisation

At 1 October 2017

Amortisation

At 30 September 2018

Amortisation

At 30 September 2019

Net book value

At 30 September 2019

At 30 September 2018 (restated)

118 Annual report 2019 / Countryside Properties PLC

Software
£m

Customer-
related
£m

Brand
£m

Goodwill
£m

3.0

0.7

1.4

5.1

3.1

8.2

0.6

1.0

1.6

1.7

3.3

4.9

3.5

—

42.1

—

42.1

—

42.1

—

3.4

6.7

24.2

10.4

—

34.6

—

34.6

4.9

2.2

7.1

3.3

10.1

10.4

37.8

72.0

—

109.8

—

109.8

—

32.0

38.7

24.2

27.5

109.8

2018

147.9

13.3

161.2

447.5

36.0

453.6

35.5

Total
£m

65.0

125.2

1.4

191.6

3.1

194.7

5.5

6.6

12.1

11.7

23.8

170.9

179.5

12. Intangible assets continued
Goodwill
Goodwill held by the Group comprises that resulting from the following acquisitions:

Copthorn Holdings Limited (April 2013)

Millgate Developments Limited (February 2014)

Westleigh Group Limited (April 2018)

2019
£m

19.3

18.5

72.0

2018
restated
£m

19.3

18.5

72.0

109.8

In all three cases, the acquired entities represent cash generating units (“CGUs”) or groups of CGUs for the purpose of impairment testing.

The prior year Group financial statements presented provisional accounting for the acquisition of Westleigh. The Directors’ assessment of the fair
values of the acquired assets and liabilities has now concluded. As a result, goodwill relating to Westleigh has been restated, as required by IFRS 3
“Business Combinations”. Refer to Note 14 for further details.

Impairment testing
Goodwill is tested annually for impairment.

F
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a

The recoverable amount has been determined as the value in use of the applicable CGU or group of CGUs. The key estimates for the value in use
calculation are the forecast cash flows and the discount rates.

Forecast cash flows are derived from the most recent Board-approved five-year plan. The five-year plan considers current market trends and the
Group’s growth plans and incorporates management’s assumptions around economic activity, planned changes to the business model, and expected
regulatory and tax changes.

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Cash flows beyond the five-year plan are extrapolated using a growth rate of 1% per annum based on GDP growth forecasts by HM Treasury.

Forecast cash flows are discounted using a pre-tax discount rate that reflects the time value of money and the estimated risk profile of the CGU or
group of CGUs. The discount rate applied to the Copthorn and Millgate CGUs was 10.7%. The discount rate applied to the Westleigh CGU was 12.7%.

Sensitivity analysis has been undertaken for each impairment review by changing discount rates, cash flows and long-term growth rates applicable to
each CGU or group of CGUs to which goodwill has been allocated. Neither an increase in the discount rate of 3%, a reduction in cash flows of 10%
per annum, nor a reduction of the long-term growth rate to 0% would indicate impairment in any of the CGUs or groups of CGUs.

Brands
Brands reflect those acquired in business combinations and are not internally generated:

Countryside

Millgate

Westleigh

Acquired
(year)

Life
(years)

2013

2014

2018

2019
£m

9.1

7.7

7.4

24.2

2018
£m

9.8

8.3

9.4

27.5

Customer-related intangible assets
Customer-related intangible assets of £32.0m (2018: £38.7m) include customer relationships and customer contracts recognised on the acquisition of
Westleigh in the prior financial year. Useful economic lives of these assets range between two and a half and ten years, reflecting the range of expected
timeframes over which the Group will derive value from these assets.

Amortisation is charged to administrative expenses in the statement of comprehensive income.

Countryside Properties PLC / Annual report 2019 119

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

13. Property, plant and equipment

Cost

At 1 October 2017

Acquired in business combinations (restated)

Additions

Disposals

At 30 September 2018 (restated)

Additions

Disposals

At 30 September 2019

Accumulated depreciation

At 1 October 2017

Depreciation charge for the year

Disposals

At 30 September 2018

Depreciation charge for the year

Disposals

At 30 September 2019

Net book value

At 30 September 2019

At 30 September 2018 (restated)

Plant and
machinery
£m

Fixtures and
fittings
£m

5.8

0.5

2.4

(0.2)

8.5

2.8

(0.9)

10.4

4.6

0.8

(0.2)

5.2

1.5

(0.8)

5.9

4.5

3.3

4.1

0.4

2.9

—

7.4

5.0

(1.2)

11.2

2.7

0.3

—

3.0

0.7

(0.8)

2.9

8.3

4.4

Total
£m

9.9

0.9

5.3

(0.2)

15.9

7.8

(2.1)

21.6

7.3

1.1

(0.2)

8.2

2.2

(1.6)

8.8

12.8

7.7

Depreciation is charged to administrative expenses in the statement of comprehensive income.

Property, plant and equipment as at 30 September 2018 has been restated, as described in Note 14.

14. Business combination
On 12 April 2018, the Group acquired 100% of Westleigh, a well-established partnerships homebuilder based in Leicester, as part of the Group’s
strategy to expand the Partnerships business.

The prior year Group financial statements presented provisional accounting for the acquisition, based on the assessment of fair values that was
underway at the time. The Directors’ assessment of the fair values of Westleigh’s assets and liabilities has now concluded within the measurement
period, as defined by IFRS 3. As a result, goodwill relating to Westleigh has been restated as required by IFRS 3. The increase is goodwill of £10.0m is
primarily due to the fair value of inventories being reduced by £8.9m, as set out in the table below:

Property, plant and equipment

Intangible assets

Inventory

Cash

Other current assets

Other payables

Deferred tax liabilities

Borrowings

Total identifiable net assets

Goodwill

Total

30 September
2018
reported
£m

Adjustments within
the measurement
period
£m

30 September
2018
restated
£m

1.1

53.2

24.9

23.9

(31.0)

(8.5)

(72.9)

14.6

62.0

76.6

(0.2)

—

(8.9)

—

(0.8)

(0.1)

—

(10.0)

10.0

—

0.9

53.2

16.0

23.9

23.1

(31.1)

(8.5)

(72.9)

4.6

72.0

76.6

These changes have been reflected in the comparative presentation of the statement of financial position as at 30 September 2018, with no change to
reported financial performance or cash flows of the Group.

120 Annual report 2019 / Countryside Properties PLC

Notes to the consolidated financial statements continuedFor the year ended 30 September 2019i

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15. Investment in joint ventures
The Directors have aggregated the disclosure of the joint ventures’ statements of financial position and statements of comprehensive income,
and separately disclosed material joint ventures below. The Group’s aggregate investment in joint ventures is represented by:

2019

2018

Partnerships
£m

Housebuilding
£m

Group
£m

Partnerships
£m

Housebuilding
£m

Group
£m

Summarised statement of financial position:

Non-current assets

Current assets excluding cash

Cash

Current liabilities

Non-current liabilities

Movements in net assets:

At 1 October

Profit for the year

Dividends paid

Repayment of members’ interest

Other movements

Investment in new joint ventures

At 30 September

Summarised statement of comprehensive income:

Revenue
Expenses

Operating profit

Finance costs

Income tax expense

Profit for the year

Group’s share in %

Share of revenue

Share of operating profit

Dividends received by the Group

Investment in joint ventures

1.7

78.6

3.5

(45.6)

(3.4)

34.8

27.3

26.6

(19.1)

—

34.8

89.6
(63.0)

26.6

—

26.6

7.1

212.5

15.5

(37.8)

(107.7)

8.8

291.1

19.0

(83.4)

(111.1)

89.6

124.4

97.8

54.6

(56.1)

(5.8)

(0.9)

—

89.6

125.1

81.2

(75.2)

(5.8)

(0.9)

—

124.4

263.5
(204.7)

353.1
(267.7)

58.8

(0.5)

(3.8)

54.5

85.4

(0.5)

(3.8)

81.1

50.0%

176.6

42.7

37.6

62.2

0.5

69.1

10.8

(51.4)

(1.7)

27.3

7.8

19.2

(6.1)

—

6.4

27.3

89.0
(69.9)

19.1

—

0.1

19.2

0.8

257.6

11.6

(45.0)

(127.2)

97.8

110.9

56.9

(45.3)

(24.2)

(0.5)

—

97.8

307.2
(243.3)

63.9

(1.6)

(5.4)

56.9

1.3

326.7

22.4

(96.4)

(128.9)

125.1

118.7

76.1

(51.4)

(24.2)

(0.5)

6.4

125.1

396.2
(313.2)

83.0

(1.6)

(5.3)

76.1

50.0%

198.1

41.5

25.8

62.5

The amount due from joint ventures is £49.7m (2018: £56.5m) and the amount due to joint ventures is £0.4m (2018: £0.4m). Transactions between
the Group and its joint ventures are disclosed in Note 27.

The table below reconciles the movement in the Group’s aggregate investment in joint ventures:

At 1 October

Share of post-tax profit

Dividends received

Investment in new joint ventures

Repayment of members’ interest

Other movements

At 30 September

2019
£m

62.5

40.6

(37.6)

—

(2.9)

(0.4)

62.2

2018
£m

59.4

38.0

(25.8)

3.2

(12.1)

(0.2)

62.5

Countryside Properties PLC / Annual report 2019 121

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

15. Investment in joint ventures continued
Individually material joint ventures
The Directors consider that joint ventures are material where they contribute to 5% or more of either Group profit after tax or Group net assets.
The summarised results and position of individually material joint ventures are highlighted below:

2019

Summarised statement of financial position:
Non-current assets

Current assets excluding cash

Cash

Current liabilities

Non-current liabilities

Movements in net assets:
At 1 October

Profit for the year

Dividends paid

Repayment of members’ interest

Other movements

At 30 September

Summarised statement of comprehensive income:
Revenue

Expenses

Operating profit

Finance (costs)/income

Income tax expense

Profit for the year

2018

Summarised statement of financial position:
Non-current assets

Current assets excluding cash

Cash

Current liabilities

Non-current liabilities

Movements in net assets:
At 1 October

Profit for the year

Dividends paid

Repayment of members’ interest

Other movements

At 30 September

Summarised statement of comprehensive income:
Revenue

Expenses

Operating profit

Finance costs

Income tax expense

Profit for the year

122 Annual report 2019 / Countryside Properties PLC

Acton
Gardens
LLP
£m

Greenwich
Millennium
Village Ltd
£m

Countryside Zest
(Beaulieu Park)
LLP
£m

Countryside L&Q
(Oaks Village)
LLP
£m

Partnerships Housebuilding

Housebuilding

1.7

70.9

1.7

(43.9)

(3.4)

27.0

19.5

26.6

(19.1)

—

27.0

89.6

(63.0)

26.6

—

26.6

0.1

48.0

1.0

(13.8)

(4.7)

30.6

37.9

14.6

(21.9)

—

30.6

71.9

(53.4)

18.5

(0.5)

(3.4)

14.6

6.6

134.4

8.9

(20.2)

(99.5)

30.2

22.1

30.1

(22.0)

—

30.2

130.5

(100.5)

30.0

0.1

—

30.1

0.4

27.0

0.4

(2.3)

(3.5)

22.0

32.3

7.6

(12.2)

(5.8)

0.1

22.0

33.7

(26.0)

7.7

(0.1)

—

7.6

Acton
Gardens
LLP
£m

Greenwich
Millennium
Village Ltd
£m

Countryside Zest
(Beaulieu Park)
LLP
£m

Countryside L&Q
(Oaks Village)
LLP
£m

Partnerships

Housebuilding

0.4

57.6

8.8

(47.3)

—

19.5

6.5

19.1

(6.1)

—

19.5

89.0

(69.9)

19.1

—

19.1

0.8

46.1

3.4

(8.1)

(4.3)

37.9

42.9

15.1

(20.1)

—

37.9

80.7

(62.1)

18.6

(0.2)

(3.3)

15.1

—

171.7

1.6

(28.3)

(122.9)

22.1

9.7

21.4

(9.0)

—

22.1

117.3

(94.7)

22.6

(1.2)

—

21.4

—

34.5

0.6

(2.8)

—

32.3

52.1

12.2

(7.7)

(24.2)

(0.1)

32.3

43.2

(31.0)

12.2

—

12.2

Notes to the consolidated financial statements continuedFor the year ended 30 September 2019i

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15. Investment in joint ventures continued
Group’s investment in joint ventures
The Group’s joint ventures, all of which are incorporated and domiciled in the UK and are accounted for using the equity method, comprise:

Acton Gardens LLP

Brenthall Park (Commercial) Limited

Brenthall Park (Infrastructure) Limited

Brenthall Park (Three) Limited

Brenthall Park Limited

Cambridge Medipark Limited

CBC Estate Management Limited1

C.C.B. (Stevenage) Limited2

Countryside 27 Limited

Countryside L&Q (Oaks Village) LLP

Countryside Annington (Colchester) Limited (in liquidation)3

Countryside Annington (Mill Hill) Limited

Countryside Clarion (Eastern Quarry) LLP

Countryside Clarion (North Leigh) LLP

Countryside Properties (Accordia) Limited

Countryside Properties (Booth Street 2) Limited

Countryside Properties (Merton Abbey Mills) Limited

Countryside Maritime Limited

Countryside Neptune LLP

Countryside Zest (Beaulieu Park) LLP

Greenwich Millennium Village Limited

iCO Didsbury Limited

Mann Island Estate Limited

Marrco 25 Limited

Oaklands Hamlet Resident Management Limited

Peartree Village Management Limited

Silversword Properties Limited

Westleigh Cherry Bank LLP

Woolwich Countryside Limited (in liquidation)4

Country of
incorporation

Ownership
interest %

50.0

33.3

50.0

39.0

50.0

Principal
activity

Development

Dormant

Commercial

Estate management

Non-trading

Commercial

Development

Dormant

Non-trading

Dormant

Non-trading

Development

Commercial

Estate management

Non-trading

Estate management

Commercial

Non-trading

All joint ventures hold the registered address of Countryside House, The Drive, Great Warley, Brentwood, Essex CM13 3AT, except where
noted otherwise.

During the year, the Group acquired the remaining shares of Countryside Properties (Salford Quays) Limited from the joint venture partner. This legal
entity is now a 100% owned subsidiary undertaking as disclosed in Note 26. There was no gain or loss recorded on acquisition in the statement of
comprehensive income, and the consideration was not material.

No joint venture was committed to the purchase of any property, plant and equipment or software intangible assets as at 30 September 2019
(2018: £Nil).

1. CBC Estate Management has the registered address of The Control Tower, 29 Liberty Square, Kings Hill, West Malling, Kent ME19 4RG.

2. C.C.B. Stevenage has the registered address of Croudace House, Tupwood Lane, Caterham, Surrey CR3 6XQ.

3. Countryside Annington (Colchester) has the registered address of The Old Exchange, 234 Southchurch Road, Southend On Sea, Essex SS1 2EG.

4. Woolwich Countryside has the registered address of 15 Canada Square, London E14 5GL.

Countryside Properties PLC / Annual report 2019 123

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

16. 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 Group’s investment in associate is represented by:

Summarised statement of financial position:

Non-current assets

Current assets excluding cash

Cash

Current liabilities

Non-current liabilities

Movements in net assets:

At 1 October

Profit for the year

Dividends paid

At 30 September

Summarised statement of comprehensive income:

Revenue

Expenses

Operating profit

Finance income

Income tax expense

Profit for the year

Group’s share in %

Share of revenue

Share of operating profit

Dividends received by the Group

Investment in associate

No amounts are due to or from the associate as at 30 September 2019 (2018: £Nil).

Transactions between the Group and its associate are disclosed in Note 27.

The below table reconciles the movement in the Group’s investment in associate:

Reconciliation to carrying amount:

At 1 October

Share of post-tax profit

Dividends received

Other movements

At 30 September

The address of the registered office of the associate is Countryside House, The Drive, Brentwood, Essex CM13 3AT.

124 Annual report 2019 / Countryside Properties PLC

2019
£m

1.0

20.8

24.8

(32.8)

(1.5)

12.3

19.2

12.4

(19.3)

12.3

32.1

(17.6)

14.5

1.0

(3.1)

12.4

28.5%

9.1

4.1

5.5

3.5

2019
£m

5.4

3.5

(5.5)

0.1

3.5

2018
£m

—

37.3

25.0

(41.4)

(1.7)

19.2

9.0

14.2

(4.0)

19.2

45.1

(27.5)

17.6

0.1

(3.5)

14.2

28.5%

12.8

4.9

1.1

5.4

2018
£m

2.6

4.0

(1.1)

(0.1)

5.4

Notes to the consolidated financial statements continuedFor the year ended 30 September 201917. Financial assets at fair value through profit or loss

At 1 October

Newly recognised assets

Increase in fair value

Unwind of discount

Disposal

Redemptions

At 30 September

2019
Overage
receivable
£m

2018
Overage
receivable
£m

2018
Shared equity
loans
£m

4.1

—

0.9

—

5.0

—

4.1

—

4.1

7.4

—

0.1

0.2

(7.4)

(0.3)

—

Overage receivable
Financial assets at fair value through profit or loss at 30 September 2019 relate solely to a deferred land overage receivable. This receivable reflects
sums which the Group is virtually certain to receive, resulting from agreements where land has been sold to a third-party and in which the Group is
entitled to a share of surplus profits once development is completed on the land sold. The carrying value of the receivable is adjusted to fair value at
each reporting date and the timing of receipt is uncertain.

The overage receivable is 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 of 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 are estimated and not observed in a market, the fair value is classified as Level 3 in the fair value hierarchy.

Shared equity loans
During the prior financial year, the Group disposed of all of its shared equity loans that were previously classified as available for sale financial assets.
IAS 39 continues to apply to these assets as they were derecognised prior to the date of initial application of IFRS 9.

18. Deferred tax assets and liabilities
Deferred tax assets held on the balance sheet date have the following expected maturities:

F
n
a
n
c
a

s
t
a
t
e
m
e
n
t
s

Amounts due to be recovered within one year

Amounts due to be recovered after more than one year

Deferred tax liabilities held on the balance sheet date have the following expected maturities:

Amounts due to be settled after more than one year

The movement in the year in the Group’s net deferred tax position was as follows:

At 1 October 2017

(Charge)/credit to the statement of comprehensive income for the year

Amount transferred to the statement of changes in equity

Deferred tax recorded on acquisition

At 30 September 2018

Charge to the statement of comprehensive income for the year

Amount transferred to the statement of changes in equity

At 30 September 2019

Losses
£m

0.9

(0.9)

—

2019
£m

1.6

3.7

5.3

2019
£m

10.9

Share-based
payments
£m

Other timing
diferences
£m

—

1.3

—

(8.5)

(7.2)

(0.7)

—

1.9

1.1

0.6

—

3.6

(0.6)

(0.7)

2.3

2018
£m

2.2

7.1

9.3

2018
£m

12.9

Total
£m

2.8

1.5

0.6

(8.5)

(3.6)

(1.3)

(0.7)

Temporary differences arising in connection with interests in joint ventures and associate are not significant. Unrecognised tax assets on joint ventures
and associate are £0.6m on historical losses of £3.5m (2018: £0.6m on historical losses of £3.5m). No deferred tax asset has been recognised in relation
to losses where it is considered that they are not recoverable in the near future. The Group has unrecognised deferred tax assets of £1.2m on historical
losses of £7.0m (2018: £1.2m on historical losses of £7.0m).

Countryside Properties PLC / Annual report 2019 125

(7.9)

(5.6)

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

19. Inventories

Development land and work in progress

Completed properties unsold or awaiting sale

2019
£m

741.4

67.2

808.6

2018
restated
£m

672.6

68.2

740.8

Development land and work in progress includes land options with a carrying value of £24.2m (2018: £20.5m).

Interest incurred on deferred land purchases amounting to £Nil (2018: £Nil) was capitalised during the year to inventories.

Total provisions against inventories as at 30 September 2019 were £3.5m (2018: £5.7m), as set out below. An impairment charge of £7.4m (2018: £Nil)
was recognised against inventories during the year, as described in Note 7.

At 1 October

Charged in the year

Released in the year

Utilised in the year

At 30 September

Inventories as at 30 September 2018 have been restated, as described in Note 14.

20. Trade and other receivables

Amounts falling due within one year:

Trade receivables

Amounts recoverable on construction contracts

Amounts owed by joint ventures

Other taxation and social security

Other receivables

Prepayments and accrued income

Amounts falling due in more than one year:

Trade receivables

Amounts recoverable on construction contracts

Total trade and other receivables

2019
£m

5.7

—

(0.5)

(1.7)

3.5

2019
£m

57.2

78.5

49.7

14.9

0.3

32.2

2018
£m

4.8

2.4

(0.3)

(1.2)

5.7

2018
restated
£m

45.1

45.2

56.5

9.5

1.8

7.8

232.8

165.9

—

15.2

12.8

9.0

21.8

248.0

187.7

The Group applies the simplified approach under IFRS 9 to measure expected credit losses (“ECL”) associated with trade and other receivables. The
carrying value of the receivable is reduced at each reporting date for any increase in the lifetime ECL, with an impairment loss recognised in the
statement of comprehensive income.

The Directors are of the opinion that there are no significant concentrations of credit risk (Note 29). Trade receivables outstanding past their due date are
£1.1m (2018: £0.8m); however, £Nil was impaired (2018: £Nil).

A provision of £8.0m (2018: £8.0m) is held against amounts due from Countryside Neptune LLP, a joint venture, to reflect the Directors’ view of the
recoverability of this advance. The other classes within trade and other receivables do not contain impaired assets.

Trade and other receivables includes £25.7m of contract assets (2018: £3.0m) relating to uninvoiced amounts where revenue has been recognised in
the statement of comprehensive income. Substantially all of the uninvoiced amounts as at 1 October 2018 were subsequently invoiced and the cash
received during the year.

The fair value of the financial assets included in trade and other receivables is not considered to be materially different from their carrying value. The fair
values are based on discounted cash flows and are within Level 3 of the fair value hierarchy.

Trade and other receivables as at 30 September 2018 have been restated, as described in Note 14.

126 Annual report 2019 / Countryside Properties PLC

Notes to the consolidated financial statements continuedFor the year ended 30 September 2019i

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s

21. Cash and borrowings
(a) Net cash and cash equivalents

Net cash and cash equivalents

2019
£m

75.6

2018
£m

47.2

Net cash and cash equivalents comprise cash and short-term deposits of £75.6m (2018: £47.2m) and overdrafts of £Nil (2018: £Nil). Cash and cash
equivalents of £34.4m (2018: £34.5m) are available to offset against amounts drawn under the Group’s revolving credit facility. There is £Nil (2018: £Nil)
ring-fenced for specific developments. At 30 September 2019, all financial assets held were in Sterling.

Cash and cash equivalents available for offset
Within the revolving credit facility the Group has a £30m overdraft facility which can be drawn by any Group company which is in the pooling
arrangement. Cash and overdrafts are presented on a gross basis in the statement of financial position.

(b) Borrowings

Other loans

2019
£m

2.2

2018
£m

2.2

Bank loans
The Group has a £300m 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 and includes an overdraft facility of £30m. As at 30 September 2019, the Group had
drawn down £Nil of the facility (2018: £Nil).

Subject to obtaining credit approval from the syndicate banks, the Group also has the option to extend the facility by a further £100m. This facility is
subject to both financial and non-financial covenants and is secured by floating charges over all the Group’s assets.

Bank loan arrangement fees are amortised over the term of the facility. At 30 September 2019, unamortised loan arrangement fees were £2.0m
(2018: £2.6m) and £0.6m (2018: £0.6m) of amortisation is included in finance costs in the statement of comprehensive income (Note 8). As the
Group did not have any debt under this facility at 30 September 2019 or 30 September 2018, the unamortised loan arrangement fees are included
within prepayments in the statement of financial position.

Other loans
During the prior financial year, the Group received an interest-free loan of £2.5m for the purpose of remediation works in relation to one of its joint
operations. The loan is repayable on 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.

(c) Alternative Performance Measure – Net debt
Net debt is calculated as borrowings less net cash and cash equivalents, and excludes debt arrangement fees including in borrowings. The table below
presents the calculation of net debt:

Borrowings

Less: net cash and cash equivalents

Net debt/(cash)

2019
£m

2.2

(75.6)

(73.4)

2018
£m

2.2

(47.2)

(45.0)

Countryside Properties PLC / Annual report 2019 127

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

22. Trade and other payables

Amounts falling due within one year:

Trade payables

Deferred land payments

Overage payable

Accruals and deferred income

Other taxation and social security

Other payables

Amounts due to joint ventures

Amounts falling due in more than one year:

Trade payables

Deferred land payments

Overage payable

Accruals and deferred income

Other payables

Total trade and other payables

2019
£m

50.7

73.0

7.4

160.2

3.3

27.6

0.4

322.6

17.9

85.3

26.5

0.3

—

130.0

452.6

2018
restated
£m

69.4

82.0

27.7

131.6

3.0

3.5

0.4

317.6

1.3

45.6

25.2

1.4

20.3

93.8

411.4

Trade and other payables principally comprise amounts outstanding for trade purchases and land acquired on deferred terms. The Directors consider
that the carrying amount of trade payables approximates to their fair value. The carrying amount of deferred land payments and overage payable
represents the discounted payment obligations. At 30 September 2019, the liabilities had been discounted by £12.4m (2018: £12.4m), reflecting the
time value of money.

Land acquired on deferred payment terms is discounted using an interest rate of 3.4% for transactions entered into from 1 April 2017 and 6.0% for
transactions prior to this date. Discount rates are regularly reviewed to ensure that the most appropriate rate is applied at the inception of new developments.

Deferred land payments include £2.4m (2018: £4.8m) relating to land acquisitions using promissory notes, issued under the Group’s revolving credit facility.

Other payables include £18.1m (2018: £20.2m) of acquisition-related deferred consideration and remuneration payable in March 2020.

Trade and other payables include £2.3m (2018: £1.9m) of contract liabilities, where the value of payments made by customers exceeds the revenue recognised
in the statement of comprehensive income. Substantially all of the contract liabilities at 1 October 2018 have been recognised as revenue during the year.

Trade and other payables as at 30 September 2018 have been restated, as described in Note 14.

23. Provisions

At 1 October

Charged in the year

Released in the year

Utilised in the year

Reclassification

At 30 September

Disclosed as current liabilities

Disclosed as non-current liabilities

2019
£m

5.3

0.4

(2.5)

(0.9)

0.1

2.4

1.8

0.6

2.4

2018
£m

2.6

1.2

—

(0.3)

1.8

5.3

4.2

1.1

5.3

Provisions held relate mostly to dilapidation and onerous lease costs. Provisions are discounted, where appropriate.

24. Share capital

Allotted, issued and fully paid

Ordinary shares of £0.01 each

128 Annual report 2019 / Countryside Properties PLC

Number of shares

2019
m

2018
m

2019
£m

2018
£m

450

4.5

Notes to the consolidated financial statements continuedFor the year ended 30 September 2019i

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a
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c
a

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t
a
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m
e
n
t
s

24. Share capital continued
Purchase of shares by Employee Benefit Trust
The Employee Benefit Trust (“EBT”) was established by the Company to acquire shares on its behalf. The EBT has waived its right to vote and to
dividends on the shares it holds which are unallocated.

The EBT acquired 4,500,000 shares in the Group through purchases on the London Stock Exchange in October 2018 to meet the Group’s expected
obligations under share-based incentive arrangements. The total amount paid to acquire the shares was £13.0m.

The EBT acquired a further 1,000,000 shares on 15 July 2019 for £3.0m using proceeds from Save As You Earn (“SAYE”) schemes.

The number of shares held in the EBT as at 30 September 2019 was 3,959,289 (2018: 3,164,054).

25. Notes to the cash flow statement
Reconciliation of profit before income tax to cash generated from operations

Profit before income tax

Adjustments for:

– Amortisation charge

– Depreciation charge

– Share of post-tax profit from joint ventures and associate

– Share-based payments (pre-tax)

– Finance costs

– Finance income

– Loss on disposal of property, plant and equipment

– Profit on disposal of available for sale financial assets

– Fair value gain on financial assets held at fair value through profit or loss

– Other non-cash items

Changes in working capital:

– Increase in inventories

– Increase in trade and other receivables

– Increase in trade and other payables

– (Decrease)/increase in provisions

Cash generated from operations

Note

15, 16

2019
£m

203.6

11.7

2.2

(44.1)

6.7

11.9

(1.0)

0.2

—

(0.9)

(0.1)

(67.8)

(66.7)

34.1

(2.9)

86.9

2018
£m

180.7

6.6

1.1

(42.0)

6.8

12.0

(1.4)

—

(1.0)

—

0.3

(59.3)

(26.8)

31.7

2.7

111.4

26. Investments
The Company substantially owns, directly or indirectly, the whole of the issued and fully paid ordinary share capital of its subsidiary undertakings.
Subsidiary undertakings of the Group as at 30 September 2019 are presented below:

Country of
incorporation

Voting rights
%

Principal
activity

Direct investment

Copthorn Holdings Limited

Stonefield Edge (Bilston) Management Company Limited

Indirect investment

Alma Estate (Enfield) Management Company Limited

Beaulieu Park Limited

Brenthall Park (One) Limited

Breedon Place Management Company Limited

Countryside 26 Limited

Countryside 28 Limited

Countryside Build Limited

Countryside Cambridge One Limited

Countryside Cambridge Two Limited

Countryside Commercial & Industrial Properties Limited

Countryside Developments Limited

Countryside Eight Limited

Countryside Four Limited

Countryside Investments Limited

Countryside Properties (Commercial) Limited

100

Holding company

Estate management

Dormant

Estate management

Development

Dormant

Holding land

Dormant

Holding company

Dormant

Countryside Properties PLC / Annual report 2019 129

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

26. Investments continued

Indirect investment continued

Countryside Properties (Holdings) Limited

Countryside Properties (In Partnership) Limited

Countryside Properties (Joint Ventures) Limited

Countryside Properties Land (One) Limited

Countryside Properties Land (Two) Limited

Countryside Properties (London & Thames Gateway) Limited

Countryside Properties (Northern) Limited

Countryside Properties (Salford Quays) Limited

Countryside Properties (Southern) Limited

Countryside Properties (Special Projects) Limited

Countryside Properties (Springhead) Limited

Countryside Properties (Uberior) Limited

Countryside Properties (UK) Limited

Countryside Properties (WGL) Limited

Countryside Properties (WHL) Limited

Countryside Properties (WPL) Limited

Countryside Residential Limited

Countryside Residential (South Thames) Limited

Countryside Residential (South West) Limited

Countryside Seven Limited

Countryside Sigma Limited

Countryside Thirteen Limited

Countryside Timber Frame Limited

Countryside (UK) Limited

Dunton Garden Suburb Limited

Fresh Wharf Residents Management Company Limited

Harold Wood Management Limited

Hilborn Management Company Limited

Knight Strategic Land Limited

Lakenmoor Ltd

Mandeville Place (Radwinter) Management Limited

Millgate Developments Limited

Millgate Homes Limited

Millgate Homes UK Limited

Millgate (UK) Holdings Limited

New Avenue (Cockfosters) Management Company Limited

Newhall Land Limited

Newhall Resident Management Company Limited

Parklands Manor Management Company Limited

Skyline 120 Management Limited

Skyline 120 Nexus Management Limited

Springhead Resident Management Company Limited

South at Didsbury Point Two Management Limited

Trinity Place Residential Management Company Limited

Urban Hive Hackney Management Limited

Watersplash Lane Management Company Limited

Westframe Limited

Westleigh Construction Limited

Westleigh LNT Limited

Westleigh Homes Limited

Wychwood Park Golf Club Limited

York Road (Maidenhead) Management Limited

130 Annual report 2019 / Countryside Properties PLC

Country of
incorporation

Voting rights
%

Principal
activity

100

74.9

100

Holding company

Dormant

Holding company

Holding land

Dormant

Non-trading

Dormant

Development

Holding company

Development

Dormant

Development

Manufacturing

Dormant

Land promotion

Estate management

Land promotion

Dormant

Estate management

Development

Dormant

Holding company

Estate management

Development

Estate management

Dormant

Estate management

Notes to the consolidated financial statements continuedFor the year ended 30 September 2019i

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s

26. Investments continued
All subsidiaries are fully consolidated, after eliminating intergroup transactions. The address of the registered office of all the subsidiaries is Countryside
House, The Drive, Brentwood, Essex CM13 3AT, except for the following. The registered office address of Millgate Developments Limited, Breedon
Place Management Company Limited, Hilborn Management Company Limited, Parklands Manor Management Company Limited and Watersplash Lane
Management Company Limited is Millgate House, Ruscombe Lane, Twyford, Berkshire RG10 9JT. The registered office address of Stonefield Edge
(Bilston) Management Company Limited is Unit 7 Portal Business Park, Eaton Lane, Tarporley CW6 9DL.

27. Related party transactions
Transactions with joint ventures and associate

Sales during the year

Net advances to joint ventures and associate at 1 October

Net repayments during the year

Net advances to joint ventures and associate at 30 September

Joint ventures

Associate

2019
£m

29.8

56.1

(6.8)

49.3

2018
£m

20.2

67.6

(11.5)

56.1

2019
£m

2.4

—

2018
£m

1.7

—

The transactions noted above are between the Group and its joint ventures and associate, the details of which are described in Note 15
and Note 16 respectively.

Sales of goods and services to related parties related principally to the provision of services to the joint ventures and associate at contractually agreed
prices. 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.

Remuneration of key management personnel
Key management personnel are deemed to be the Executive Committee, along with other Directors of the Company, including the Non-Executive
Directors. The aggregate remuneration of these personnel during the year was £11.0m (2018: £8.8m).

Transactions with key management personnel
In 2014, properties were sold at market value by the Group to a company of which Graham Cherry is a Director and shareholder. The Group leased
back these properties incurring rental expenses of £21,000 in the prior financial year. The Group no longer leases these properties and therefore
payments during the year ended 30 September 2019 were £Nil.

During the prior financial year, a close family member of Ian Sutcliffe and a close family member of Graham Cherry were employed by a subsidiary of
the Group. During the year ended 30 September 2019, two close family members of Phillip Lyons were also employed by a subsidiary of the Group.
All of 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 £190,000 (2018: less than £110,000).

28. Financial instruments
The following tables categorise the Group’s financial assets and liabilities included in the statement of financial position:

2019

Assets

Financial assets at fair value through profit or loss

Trade and other receivables

Amounts due from joint ventures

Cash and cash equivalents

2018

Assets

Financial assets at fair value through profit or loss

Trade and other receivables

Amounts due from joint ventures

Cash and cash equivalents

Financial assets
at amortised
cost
£m

Financial assets
at fair value
through profit
or loss
£m

—

151.2

49.7

75.6

276.5

—

113.9

56.5

47.2

217.6

5.0

—

5.0

4.1

—

4.1

Total
£m

5.0

151.2

49.7

75.6

281.5

4.1

113.9

56.5

47.2

221.7

Trade and other receivables presented above excludes “Prepayments and accrued income” and “Other taxation and social security”.

Countryside Properties PLC / Annual report 2019 131

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

28. Financial instruments continued

2019

Liabilities

Other loans

Deferred land payments and overage payable

Other trade and other payables

Amount due to joint ventures

2018

Liabilities

Other loans

Deferred land payments and overage payable

Other trade and other payables

Amount due to joint ventures

Other financial
liabilities at
amortised cost
£m

2.2

192.2

96.2

0.4

291.0

2.2

180.5

94.5

0.4

277.6

Other trade and other payables presented above excludes “Accruals and deferred income” and “Other taxation and social security”.

Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The following table presents the Group’s assets that are measured at fair value:

2019

Assets

Financial assets at fair value through profit or loss

2018

Assets

Financial assets at fair value through profit or loss

There were no transfers between levels during the year.

Level 1
£m

Level 2
£m

Level 3
£m

Total
£m

—

5.0

4.1

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using
valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on
entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one or
more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

132 Annual report 2019 / Countryside Properties PLC

Notes to the consolidated financial statements continuedFor the year ended 30 September 2019i

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29. Financial risk management
The main financial risks associated with the Group have been identified as liquidity risk, interest rate risk, housing market risk and credit risk.
The Directors are responsible for managing these risks and the policies adopted are set out below.

Liquidity risk
The Group finances its operations through a mixture of equity (Company share capital, reserves and retained earnings) and debt (bank loan facilities).
The Group manages its liquidity risk by monitoring its existing facilities for both financial covenant compliance and funding headroom against forecast
requirements based on short-term and long-term cash flow forecasts.

Maturity analysis
The following table sets out the contractual undiscounted maturities, including estimated cash flows, of the financial assets and liabilities of the Group
at 30 September:

Less than
one year
£m

One to two
years
£m

Two to five
years
£m

Over five
years
£m

Total
£m

2019

Assets

Cash and cash equivalents

Financial assets at fair value through profit or loss

Trade and other receivables

Amounts due from joint ventures

2019

Liabilities

Other loans

Deferred land payments and overage payable

Other trade and other payables

Amounts due to joint ventures

2018

Assets

Cash and cash equivalents

Financial assets at fair value through profit or loss

Trade and other receivables

Amounts due from joint ventures

2018

Liabilities

Other loans

Deferred land payments and overage payable

Other trade and other payables

Amounts due to joint ventures

75.6

5.0

136.4

49.7

266.7

—

82.2

78.3

0.4

160.9

47.2

4.1

95.4

56.5

203.2

—

110.4

72.9

0.4

183.7

—

9.9

—

9.9

—

80.0

9.5

—

89.5

—

19.0

—

19.0

—

34.3

21.6

—

55.9

—

5.3

—

5.3

2.5

26.7

8.2

—

37.4

—

2.5

33.1

—

35.6

—

15.7

0.2

—

15.9

—

15.1

—

15.1

75.6

5.0

151.6

49.7

281.9

2.5

204.6

96.2

0.4

303.7

47.2

4.1

114.4

56.5

222.2

2.5

192.9

94.5

0.4

290.3

Countryside Properties PLC / Annual report 2019 133

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

29. Financial risk management continued
Interest rate risk
Interest rate risk reflects the Group’s exposure to fluctuations in interest rates in the market. This risk arises from bank loans that are drawn under
the Group’s loan facilities with variable interest rates based upon UK LIBOR. For the year ended 30 September 2019 it is estimated that an increase
of 0.5% to UK LIBOR would have decreased the Group’s profit before tax by £0.5m (2018: £0.3m).

The following table sets out the interest rate risk associated with the Group’s financial liabilities:

2019

Liabilities

Other loans

Deferred land payments and overage payable

Other trade and other payables

Amounts due to joint ventures

2018

Liabilities

Other loans

Deferred land payments and overage payable

Other trade and other payables

Amounts due to joint ventures

Fixed
rate
£m

Floating
rate
£m

Non-interest
bearing
£m

Total
£m

—

3.0

—

3.0

—

2.4

—

2.4

—

4.8

—

4.8

2.2

189.8

96.2

0.4

288.6

2.2

175.7

91.5

0.4

269.8

2.2

192.2

96.2

0.4

291.0

2.2

180.5

94.5

0.4

277.6

Floating rate deferred land payments and overage payable of £2.4m (2018: £4.8m) relates to land acquisitions using promissory notes, issued under the
Group’s revolving credit facility.

The Group’s financial assets are non-interest bearing with the exception of cash and cash equivalents of £75.6m (2018: £47.2m) which attracts interest
at floating rates.

The Group has no exposure to foreign currency risk.

Housing market risk
The Group is affected by price fluctuations in the UK housing market. These are in turn affected by the wider economic conditions such as mortgage
availability and associated interest rates, employment and consumer confidence. Whilst these risks are beyond the Group’s ultimate control, risk is
spread across business activities undertaken by the Group and the geographic regions in which it operates.

Credit risk
The Group’s exposure to credit risk is limited solely to the UK for housebuilding activities and by the fact that the Group receives cash at the point of
legal completion of its sales.

The Group’s remaining credit risk predominantly arises from trade receivables, amounts recoverable from construction contracts and cash and cash equivalents.

Trade receivables on deferred settlement terms arise from land sales. The amount deferred is secured by a charge over the land until payment is received.

Trade and other receivables primarily comprise amounts receivable from Homes England (in relation to Help to Buy), housing associations and joint
ventures. The Directors consider the credit rating of the various debtors to be good in respect of the amounts outstanding and therefore credit risk is
considered to be low.

Cash and cash equivalents are held with UK clearing banks which are either A or A- rated.

Capital management
The Group’s policies seek to protect returns to shareholders by ensuring the Group will continue to trade profitably in the foreseeable future. The
Group also aims to optimise its capital structure of debt and equity over the medium-term so as to minimise its cost of capital, though for operational
flexibility may choose to use varying levels of debt in the short term. The Group manages its capital with regard to the risks inherent in the business
and the sector within which it operates by monitoring its actual cash flows against bank loan facilities, financial covenants and the cash flow forecasts
approved by the Directors.

Total borrowings

Total equity

Total capital

134 Annual report 2019 / Countryside Properties PLC

2019
£m

2.2

899.1

901.3

2018
£m

2.2

793.7

795.9

Notes to the consolidated financial statements continuedFor the year ended 30 September 2019i

F
n
a
n
c
a

s
t
a
t
e
m
e
n
t
s

30. Share-based payments
The Group recognised £6.7m (2018: £6.8m) of employee costs related to share-based payment transactions during the financial year, excluding
accrued National Insurance contributions. A deferred tax asset of £2.3m (2018: £3.6m) is held in relation to these transactions, of which £0.6m
was charged to the statement of comprehensive income (2018: £1.1m credit) and £0.7m was charged directly to equity (2018: £0.6m credit).

National Insurance contributions are payable in respect of certain share-based payment transactions and are treated as cash-settled transactions.
The cost of these contributions during the year was £0.8m (2018: £1.1m). At 30 September 2019, the carrying amount of National Insurance
contributions payable was £2.0m (2018: £2.3m), which is included in accruals within trade and other payables in the statement of financial position.

The Group operated a number of share-based payment schemes during the financial year (all of which are equity settled) as set out below:

(a) Savings-Related Share Option Scheme (“SRSOS”)
The Group operates an SRSOS, which is open to all employees at the date of invitation. This is a UK tax-advantaged SAYE plan.

Under the SAYE, eligible participants are granted options over such number of shares as determined by reference to their monthly savings contract over three
years. Participants remaining in the Group’s employment at the end of the three-year savings period are entitled to use their savings to purchase shares in the
Company at a stated exercise price (set at a discount of up to 20% of the share price on the day preceding the date of grant). Employees leaving for certain reasons
are able to use their savings to purchase shares within six months of their cessation of employment. A reconciliation of option movements is shown below.

Options granted during the year were valued using the Black Scholes option-pricing model. No performance conditions or assumptions regarding
service were included in the fair value calculations. The fair value per option granted during the year and the assumptions used in the calculation are
detailed in the table below:

Date of grant

Options granted (millions)

Share price at date of grant (pence)

Exercise price (pence)

Volatility (%)

Option life (years)

Expected dividend yield (%)

Risk-free rate (%)

Fair value per option – Black Scholes (pence)

Movements in the year

Options outstanding at 1 October 2017

Granted

Lapsed

Forfeited

Options outstanding at 30 September 2018

Granted

Lapsed

Forfeited

Exercised

Options outstanding at 30 September 2019

27 June
2019

19 December
2017

22 December
2016

16 March
2016

2.1

293

245

3.9

0.6

349

282

3.6

0.6

0.8

236

192

3.0

1.0

3.0

240

192

3.0

1.0

Instruments
m

—

2.1

—

2.1

—

0.6

—

(0.1)

0.5

—

(0.1)

—

0.4

0.7

—

(0.1)

0.6

—

(0.1)

—

0.5

2.3

—

(0.2)

2.1

—

(2.0)

0.1

The resulting fair value is expensed over the service period of three years, on the assumption that 15% p.a. of options will lapse over the service
period as employees leave the Company based on the Group’s experience of employee attrition rates.

Options under the March 2016 grant vested on 1 April 2019, with 67% of potential options vesting. The average share price during the year ended
30 September 2019 was 307 pence.

Awards under the December 2016 grant will vest on 1 February 2020.

The weighted average remaining contractual life of share options outstanding at 30 September 2019 was 2.1 years (2018: 0.9 years).

(b) Long-Term Incentive Plan (“LTIP”)
Under the LTIP, shares are conditionally awarded to senior managers of the Group. The core awards are calculated as a percentage of the participants’
salaries and scaled according to grade. The awards are assessed against ROCE, TNAV and relative total shareholder return (“TSR”).

Straight line vesting will apply if performance falls between threshold and target or target and maximum. Performance will be measured at the end of
the three-year performance period. If the required level of performance has been reached, the awards vest and the shares under award will be
released. For grants from 1 October 2018, once released, the shares are subject to a two-year post-vesting holding period. Dividends do not accrue
on the shares that vest.

Countryside Properties PLC / Annual report 2019 135

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

30. Share-based payments continued
(b) Long-Term Incentive Plan (“LTIP”) continued
The weighted average remaining contractual life of LTIP awards outstanding at 30 September 2019 was 1.2 years (2018: 1.3 years). Details of the
shares conditionally allocated at 30 September 2019 are set out below.

The conditional shares were valued using the following methods:

• for the non-market-based elements of the award, a combination of a Black Scholes option-pricing model; and

• for the relative TSR elements of the award, a Monte Carlo simulation model.

The key assumptions underpinning the Black Scholes option-pricing model and Monte Carlo simulation model are set out in the table below:

Date of grant

Awards granted (millions)

Share price at date of grant (pence)

Exercise price (pence)

Volatility (%)

Award life (years)

Expected dividend yield (%)

Risk-free rate (%)

TNAV/ROCE fair value per conditional share – Black Scholes (pence)

TSR fair value per conditional share – Monte Carlo (pence)

Fair value per conditional share – total (pence)

Movements in the year

Awards outstanding at 1 October 2017

Granted

Lapsed

Awards outstanding at 30 September 2018

Granted

Lapsed

Forfeited
Exercised

Awards outstanding at 30 September 2019

19 December
2018

19 December
2017

22 May
2017

15 December
2016

18 February
2016

3.5

288

nil

4.8

0.7

170

215

2.7

349

nil

3.5

0.6

220

274

0.2

299

nil

3.0

1.0

179

225

3.7

236

nil

3.0

1.0

151

191

3.8

237

nil

3.0

1.0

153

195

Instruments
m

—

3.5

(0.4)

(0.1)
—

3.0

—

2.7

—

2.7

—

(0.1)

(0.1)
—

2.5

0.2

—

0.2

—

—
—

0.2

3.4

—

(0.2)

3.2

—

(0.1)

—
—

3.1

3.4

—

(0.2)

3.2

—

(0.5)

—
(2.7)

—

The first awards under the Plan vested on 18 February 2019 with 71.1% of potential awards vesting. Awards under the December 2016 grant will
vest on 16 December 2019. The performance conditions for this award were measured at 30 September 2019 and 77.9% of the awards outstanding
will vest.

(c) Deferred Bonus Plan (“DBP”)
Under the DBP, certain senior managers and Directors of the Group receive one-third of their annual bonus entitlement as a conditional share award.
The number of shares awarded is calculated by dividing the value of the deferred bonus by the average mid-market share price on the three business
days prior to grant. The shares vest after three years subject to the employee remaining in the employment of the Group. If an employee leaves during
the three-year period, the shares are forfeited except in certain circumstances as set out in the Plan rules. Dividends accrue on the shares that vest.

The fair value of the awards is equal to the share price on the date of grant. The fair value is expensed to the statement of comprehensive income in a
straight line over four years, being the year in which the bonus is earned and the three-year holding period.

During the year, 0.4 million shares were conditionally allocated on 19 December 2018 (2018: 0.4 million) with the share price on the date of grant
being 288 pence. A reconciliation of the number of shares conditionally allocated is shown below:

Movements in the year

Awards outstanding at 1 October 2017

Granted

Awards outstanding at 30 September 2018

Granted

Awards outstanding at 30 September 2019

136 Annual report 2019 / Countryside Properties PLC

19 December
2018
m

19 December
2017
m

15 December
2016
m

—

0.4

—

0.4

—

0.4

0.5

—

0.5

—

0.5

Notes to the consolidated financial statements continuedFor the year ended 30 September 2019i

F
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m
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31. Operating lease commitments
The Group has various leases under non-cancellable operating lease agreements. The lease terms are between one and 20 years, and the majority of
lease agreements are renewable at the end of the lease period at market rate.

The Group also leases various vehicles, under cancellable lease agreements. The Group is required to give a six-month notice for termination of
these agreements.

The charge to the statement of comprehensive income relating to operating leases during the year was £7.7m (2018: £6.3m).

At 30 September the future aggregate minimum lease payments under non-cancellable operating leases were as follows:

Within one year

Later than one year and less than five years

After five years

2019
£m

5.6

13.8

7.5

26.9

2018
£m

5.2

10.2

10.7

26.1

32. Capital commitments
The Group was not committed to the purchase of any property, plant and equipment or software intangible assets at 30 September 2019 (2018: £Nil).

33. Parent company guarantees
The Group has made parent company guarantees to its joint ventures and associate in the ordinary course of business.

The Group has entered into counter indemnities to banks, insurance companies, statutory undertakings and the National House Building Council in
the ordinary course of business, including those in respect of joint ventures and associate, from which it is anticipated that no material liabilities will arise.

34. 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 of 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 individual developments or are otherwise accrued in the statement of financial position.

During the year, the Competition & Markets Authority commenced an inquiry into the sale of leasehold properties. We are fully co-operating with
this sector-wide inquiry and the Directors believe that no liability exists in relation to this matter as at 30 September 2019.

During the year, an amendment to Building Regulations banned the use of combustible materials on the external cladding of tall buildings. The Directors
have commissioned an independent third-party review of historical developments and no provision has been made for remedial works as at
30 September 2019. This will be reviewed in the year ending 30 September 2020 when the third-party review has been concluded.

35. Dividends
The following dividends have been recognised as distributions and paid in the year:

Prior year final dividend per share of 6.6 pence (2018: 5.0 pence)

Current year interim dividend per share of 6.0 pence (2018: 4.2 pence)

2019
£m

29.2

26.8

56.0

2018
£m

22.3

18.8

41.1

The Board of Directors recommend a final dividend of 10.3 pence per share, amounting to a total dividend of £45.9m (2018: £29.2m) which will
be paid on 7 February 2020 to shareholders on the register on 20 December 2019, subject to shareholder approval. The recommended dividend
has not been recognised as a liability in these financial statements as the shareholders’ right to receive the dividend had not been established at
30 September 2019.

Countryside Properties PLC / Annual report 2019 137

Notes to the consolidated financial statements continued

For the year ended 30 September 2019

36. Adoption of new and revised accounting standards
During the financial year ended 30 September 2019, the Group has adopted the following accounting standards issued by the International Accounting
Standards Board (“IASB”):

• IFRS 9 “Financial Instruments”

• IFRS 15 “Revenue from Contracts with Customers”

The impact of the adoption of these new standards on the Group’s financial statements is explained below.

IFRS 9 “Financial Instruments”
Classification and measurement of financial assets
IFRS 9 replaces the guidance in IAS 39 “Financial Instruments: Recognition and Measurement” and addresses the classification, measurement,
impairment and recognition of financial assets and financial liabilities.

Financial assets previously classified as loans and receivables under IAS 39 have been classified and measured at amortised cost under IFRS 9.

Financial assets previously classified as available for sale have been classified and measured at fair value through profit or loss under IFRS 9. Prior to
the implementation of IFRS 9, changes to the fair value of available for sale financial assets were recorded within reserves, to the extent available.
On transition to IFRS 9, fair value gains and losses are recorded directly in the statement of comprehensive income.

At the date of initial application of IFRS 9, available for sale financial assets related solely to a deferred land overage receivable (Note 17). There had
been no changes to fair value recorded on the overage receivable from the date of initial recognition to the date of transition to IFRS 9. As a result,
no adjustments were required on transition to IFRS 9.

During the prior financial year, the Group disposed of all of its shared equity loans that were previously classified as available for sale financial assets.
IAS 39 continues to apply to these assets as they were derecognised prior to the date of initial application of IFRS 9.

Impairment of financial assets
IFRS 9 also requires the Group to recognise expected credit losses (“ECL”) and to update the amount of ECL recognised at each reporting date to
reflect changes in the credit risk of financial assets.

The Group applies the simplified approach under IFRS 9. This involves measuring the lifetime ECL for trade and other receivables at all times. Given the
nature of the receivables and lack of significant exposure to ECL, no adjustments were required on transition to IFRS 9.

IFRS 15 “Revenue from Contracts with Customers”
IFRS 15 replaces IAS 18 “Revenue”, IAS 11 “Construction Contracts” and related interpretations. The core principle of IFRS 15 is that an entity will
recognise revenue to reflect the transfer of goods and services to customers at the amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services.

IFRS 15 introduces a five-step approach to the timing of revenue recognition based on performance obligations in contracts with customers. Revenue
is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good
or service.

A full assessment of the Group’s principal revenue streams against the requirements of IFRS 15 has been performed as set out in the table opposite.

IFRS 15 has been adopted using the modified retrospective approach with no restatement of comparative information.

The impact of IFRS 15 on the Group is as follows:

• proceeds from the sale of part exchange properties are now presented as revenue, as opposed to an offset to cost of sales; and

• where there are residual obligations in land sale contracts that are not satisfied at the balance sheet date, an element of the transaction price

is deferred into future periods.

During the year ended 30 September 2019, £9.1m of revenue has been recognised on the sale of part exchange properties, or £10.3m on an adjusted
basis. Income from the sale of part exchange properties recognised within cost of sales for the year ended 30 September 2018 was £9.9m, or £11.8m
on an adjusted basis.

During the year ended 30 September 2019, £0.7m of revenue, and £0.2m of related profit, has been deferred relating to residual obligations in land sale
contracts that have not been satisfied at the balance sheet date (£3.0m of revenue and £0.6m of related profit on an adjusted basis). This is expected
to be realised during the year ending 30 September 2020.

138 Annual report 2019 / Countryside Properties PLC

Notes to the consolidated financial statements continuedFor the year ended 30 September 201936. Adoption of new and revised accounting standards continued
IFRS 15 “Revenue from Contracts with Customers” continued
An assessment of the Group’s principal revenue streams against the requirements of IFRS 15 is set out below:

Nature, timing of satisfaction of performance obligations and significant
payment terms

Impact of IFRS 15 compared with previous accounting standards

Revenue stream

Private housing

Revenue is recognised at a point in time on legal completion as
this is when the customer obtains control of the property. Cash
is received by the Group on legal completion and there is no
variable or financing component to the consideration received.

Sale of part exchange
properties

Revenue is recognised at a point in time on legal completion
of the part exchange property as this is when the customer
obtains control of the property. Cash is received on completion
and there is no variable or financing component to the
consideration received.

Affordable housing
and PRS contracts

Revenue is recognised over time based on surveyor-certified
valuations of work performed at the balance sheet date.

As the build progresses, customer-controlled assets are created,
with the design tailored to the specification of the customer.

The Group has an enforceable right to be paid for the work
completed to date and invoices are issued and paid over the life
of the development.

Under IAS 18, revenue was recognised when the risks and rewards
were transferred to the customer, which was deemed to be on
legal completion.

There is therefore no impact on the timing of revenue recognition
on transition to IFRS 15.

Under IAS 18, the profit/(loss) on the sale of a part exchange
property was included within cost of sales, linked to a sale of a
Countryside property.

Under IFRS 15, the sale of the part exchange property is treated
as a separate transaction with revenue recognised in line with the
treatment of private housing. The proceeds are presented within
private revenue.

These contracts were previously recognised in accordance with
IAS 11 with revenue and costs recognised by reference to stage
of completion of the contract activity.

There is therefore no impact of the timing of revenue recognition
on transition to IFRS 15.

F
n
a
n
c
a

s
t
a
t
e
m
e
n
t
s

Land sales

Revenue is recognised at a point in time on unconditional
exchange of contracts as this is the point at which the Group is
considered to have satisfied its performance obligations.

Under IAS 18, revenue was recognised when the risks and rewards
were transferred to the customer, which was deemed to be on
unconditional exchange of contracts.

Where there are residual obligations in the land sale contract
that are not satisfied at the balance sheet date, an element of the
transaction price is deferred into future periods.

Revenue is recognised on the residual obligations at a point in
time when the performance obligations have been satisfied.

Under IFRS 15, the land sale will continue to be recognised
on unconditional exchange of contracts.

If there are residual obligations in the land sale contract that
are not satisfied at the balance sheet date, an element of the
transaction price is deferred into future periods.

Cash is either received on completion or on deferred settlement
terms. Where land is sold on deferred settlement terms, the revenue
and associated receivable are discounted to their fair value.

Commercial sales

Revenue is typically recognised at a point in time on unconditional
exchange of contracts as this is the point at which the Group is
considered to have satisfied its performance obligations.

Cash is received on legal completion and in most cases there is
no variable or financing component to the consideration received.
In some cases, where longer-term performance obligations
are present, for example design and build contracts, revenue is
recognised over time as described above in “Affordable housing
and PRS contracts”.

Under IAS 18, revenue was recognised when the risks and rewards
were transferred to the customer. For commercial sales recognised
at a point in time, this was deemed to be on unconditional exchange
of contracts.

There is therefore no impact on the timing of revenue recognition
on transition to IFRS 15.

For revenue recognised over time there is no impact on transition
to IFRS 15 as described above in “Affordable housing and PRS
contracts”.

Countryside Properties PLC / Annual report 2019 139

Parent company statement of financial position

As at 30 September 2019

Fixed assets

Investments

Current assets

Debtors

Cash and cash equivalents

Creditors: amounts falling due within one year

Net current (liabilities)/assets

Total assets less current liabilities

Capital and reserves

Retained earnings:

At 1 October

Loss for the year

Dividends paid

Other changes in retained earnings

Called up share capital

Total equity

Notes

2019
£m

2018
£m

727.0

76.3

0.1

(215.2)

(138.8)

588.2

649.3

(3.3)

(56.0)

(6.3)

583.7

4.5

588.2

75.8

—

(149.0)

(73.2)

653.8

698.1

(3.0)

(41.1)

(4.7)

649.3

4.5

653.8

The notes on pages 142 to 145 are part of these financial statements.

The financial statements were approved by the Board of Directors and authorised for issue on 20 November 2019 and are signed on its behalf by:

Ian Sutcliffe
Director

Mike Scott
Director

Company Registration No. 09878920

140 Annual report 2019 / Countryside Properties PLC

F
n
a
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a

s
t
a
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e
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e
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t
s

Parent company statement of changes in equity

For the year ended 30 September 2019

At 1 October 2017

Loss for the year

Total comprehensive expense for the year

Dividends paid

Share-based payment expense

Purchase of shares by Employee Benefit Trust

At 30 September 2018

Loss for the year

Total comprehensive expense for the year

Dividends paid

Share-based payment expense

Purchase of shares by Employee Benefit Trust

At 30 September 2019

Called up
share
capital
£m

Profit
and loss
account
£m

4.5

—

4.5

—

698.1

(3.0)

(41.1)

6.7

(11.4)

649.3

(3.3)

(56.0)

6.7

(13.0)

Total
equity
£m

702.6

(3.0)

(41.1)

6.7

(11.4)

653.8

(3.3)

(56.0)

6.7

(13.0)

4.5

583.7

588.2

Countryside Properties PLC / Annual report 2019 141

Notes to the parent company financial statements

For the year ended 30 September 2019

1. Accounting policies
Company information
Countryside Properties PLC (the “Company”) was incorporated on 18 November 2015 to serve as a holding company for the purposes of listing on
the London Stock Exchange. Countryside Properties PLC was admitted to the premium segment of the London Stock Exchange on 17 February 2016.

The Company is a limited company domiciled and incorporated in England and Wales. The Company’s registered office is Countryside House,
The Drive, Brentwood, Essex CM13 3AT.

1.1 Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”
and the requirements of the Companies Act 2006.

FRS 102 allows a qualifying entity certain disclosure exemptions, subject to certain conditions which have been complied with, including notification
of, and no objection to, the use of exemptions by the Company’s shareholders.

The Company has taken advantage of the following exemptions:

• from preparing a statement of cash flows, on the basis that it is a qualifying entity and the statement of cash flows, included in these financial

statements, includes the Company’s cash flows;

• from the financial instrument disclosures, required under FRS 102 paragraphs 11.39 to 11.48A and paragraphs 12.26 to 12.29, as the information is

provided in the consolidated financial statement disclosures;

• from disclosing share-based payment arrangements, required under FRS 102 paragraphs 26.18(c), 26.19 to 26.21 and 26.23, concerning its own
equity instruments. The Company financial statements are presented with the consolidated financial statements and the relevant disclosures are
included therein; and

• from disclosing the Company key management personnel compensation, as required by FRS 102 paragraph 33.7.

As permitted by Section 408 of the Companies Act 2006, the parent company’s profit and loss account has not been presented in these financial statements.

The financial statements are prepared in Sterling, which is the functional currency of the Company, and are rounded to the nearest hundred thousand pounds.

The financial statements are prepared on a going concern basis under the historical cost convention. The principal accounting policies adopted are set out below.

The Company has not disclosed the information required by regulation 5(1)(b) of the Companies (Disclosure of Auditor Remuneration and Liability
Limitation Agreements) Regulations 2008 as the Group accounts of the Company are required to comply with regulation 5(1)(b) as if the undertakings
included in the consolidation were a single group.

1.2 Going concern
The Company’s ability to continue as a going concern is inextricably linked to the results of the Group as a whole. Having considered the Group’s
cash flow forecasts, the Directors are satisfied that the Company has sufficient liquidity and covenant headroom to enable the Company to meet its
liabilities as they fall due for at least the next 12 months. The Directors have also received confirmation from Group undertakings that there is no
intent to recall amounts owed of £214.8m in the next 12 months. As such, the Directors consider the Company to be a going concern and these
financial statements have been prepared on this basis.

The Group’s business activities, together with the factors likely to affect its future development, are set out in the Strategic Report on pages 2 to 33.
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described on pages 34 to 37 of the Strategic Report.
Further disclosures regarding borrowings are provided in Note 21 to the Group financial statements.

1.3 Fixed asset investments
The value of the investment in each subsidiary held by the Company is recorded at cost less any impairment in the Company’s statement of financial position.

A subsidiary is an entity that the Company has the power to control.

1.4 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other short-term deposits held by the Company with maturities of three months or
less. Bank overdrafts are classified within current liabilities.

142 Annual report 2019 / Countryside Properties PLC

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1. Accounting policies continued
1.5 Financial instruments
Fair value measurement of financial instruments
The Company has elected to adopt the recognition and measurement provisions of IAS 39 “Financial Instruments: Recognition and Measurement”
and the disclosure requirements of Sections 11 and 12 of FRS 102.

Financial assets
Financial assets primarily represent loans to subsidiary companies and cash, which are initially recognised at fair value.

Borrowings
Interest-bearing bank loans and overdrafts are recorded initially at their fair value, net of direct transaction costs. Borrowings are subsequently carried
at their amortised cost and loan arrangement fees are amortised over the term of the instrument. Finance costs associated with each individual
drawdown are expensed over the period of that drawdown.

Further details of the Company’s bank loans can be found in Note 21 to the Group financial statements.

1.6 Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments
are recognised as liabilities once they are no longer at the discretion of the Company.

1.7 Taxation
The current tax payable is based on taxable profit for the period which differs from accounting profit as reported in the statement of comprehensive
income because it excludes items of income or expense that are taxable or deductible in other years and those items never taxable or deductible.
The Group’s liability for current tax is measured using tax rates that have been enacted or substantively enacted by the reporting date.

1.8 Dividend
Dividend distributions to the Company’s shareholders are recognised in the Company’s financial statements in the periods in which the final dividends
are approved in the Annual General Meeting, or when paid in the case of an interim dividend.

1.9 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity
as a deduction from the proceeds.

1.10 Related parties
The Group discloses transactions with related parties as described in Note 27 to the Group financial statements. Where appropriate, transactions
of a similar nature are aggregated unless, in the opinion of the Directors, separate disclosure is necessary to understand the effect of the transactions
on the Group financial statements.

2. Critical accounting judgements and estimates
The preparation of the financial statements 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.

Critical accounting judgements
In the process of applying the Company’s accounting policies, which are described above, the Directors have made no individual judgements that have
had significant impact upon the financial information, apart from those involving estimations, which are dealt with below.

Key sources of estimation uncertainty
Estimates and underlying assumptions affecting the financial statements are based on historical experience and other relevant factors and are reviewed
on an ongoing basis. This approach forms the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent
from other sources. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based or
as a result of new information. Such changes are recognised in the year in which the estimate is revised.

The key sources of estimation uncertainty that have a risk of causing a material adjustment to the carrying value of assets and liabilities are described below.

Impairment of fixed asset investments
Determining whether fixed asset investments are impaired requires judgement and estimation. The Directors periodically review fixed asset
investments for possible impairment when events or changes in circumstances indicate, in management’s judgement, that the carrying amount of
an asset may not be recoverable. Such indicating events would include a significant planned restructuring, a major change in market conditions or
technology and expectations of future operating losses or negative cash flows. When such impairment reviews are conducted, the Company will
perform valuations based on cash flow forecasts, following the same valuation methodologies and assumptions as set out in the Group’s annual
goodwill reviews described in Note 12 to the Group financial statements.

Countryside Properties PLC / Annual report 2019 143

Notes to the parent company financial statements continued

For the year ended 30 September 2019

3. Operating loss
The Company had no employees during the year (2018: none).

Directors’ emoluments are disclosed in Note 5 to the Group financial statements.

Details of the audit fees can be found in Note 7 to the Group financial statements.

4. Investments

At 1 October and 30 September

2019
£m

727.0

2018
£m

727.0

Details of the Company’s subsidiaries at 30 September 2019 are included in Note 26 to the Group financial statements.

The Company conducted an impairment review following the same valuation methodologies and assumptions as set out in the Group’s annual goodwill
reviews described in Note 12 to the Group financial statements. Neither an increase in the discount rate of 3%, a reduction in Group cash flows of
10% per annum, nor a reduction in the long-term growth rate to 0% would indicate an impairment in the Company’s investments. Therefore, the
Company did not record an impairment charge during the year ended 30 September 2019 (2018: £Nil).

5. Debtors
Amounts falling due within one year:

Amounts owed by Group undertakings

Corporation tax recoverable

Prepayments and accrued income

The amounts owed by Group undertakings to the Company are unsecured, repayable on demand and non-interest bearing.

6. Creditors: amounts falling due within one year

Amounts owed to Group undertakings

Accruals and deferred income

2019
£m

71.0

3.3

2.0

76.3

2019
£m

214.8

0.4

215.2

2018
£m

70.6

2.6

75.8

2018
£m

148.4

0.6

149.0

The amounts owed to Group undertakings by the Company are unsecured, repayable on demand and non-interest bearing.

Bank loans
Details of the Group’s facilities and borrowings are disclosed in Note 21 to the Group financial statements.

7. Called up share capital

2019

Number of
shares
m

Called up
share capital
£m

Share
premium
£m

Number of
shares
m

2018

Called up
share capital
£m

Share
premium
£m

Issued, called up and fully paid

At 1 October and 30 September

450

4.5

—

450

4.5

—

Note 24 to the Group financial statements provides details of shares purchased and held by the Employee Benefit Trust during the year.

144 Annual report 2019 / Countryside Properties PLC

8. Commitments and contingent liabilities
Guarantees
The Company has made guarantees to the Group’s joint ventures and associate, in the ordinary course of business.

The Company has entered into counter indemnities to banks, insurance companies, statutory undertakings and the National House Building Council
in the normal course of business, including those in respect of joint ventures from which it is anticipated that no material liabilities will arise.

9. Dividends
The following dividends have been recognised as distributions in the year:

Prior year final dividend per share of 6.6 pence (2018: 5.0 pence)

Current year interim dividend per share of 6.0 pence (2018: 4.2 pence)

2019
£m

29.2

26.8

56.0

2018
£m

22.3

18.8

41.1

The Board of Directors recommends a final dividend of 10.3 pence per share, amounting to a total dividend of £45.9m (2018: £29.2m) which will be
paid on 7 February 2020 to shareholders on the register on 20 December 2019, subject to shareholder approval. The recommended dividend has not
been recognised as a liability in these financial statements as the shareholders’ right to receive the dividend had not been established at 30 September 2019.

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Countryside Properties PLC / Annual report 2019 145

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 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 4a 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.

Gross profit

Add: non-underlying items

Add: share of gross profit from joint ventures and associate

Adjusted gross profit

Adjusted revenue

Adjusted gross margin

Note

2019
£m

253.6

7.4

47.8

308.8

2018
£m

229.7

—

47.2

276.9

1,422.8

1,229.5

21.7%

22.5%

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.

Adjusted operating profit

Adjusted revenue

Adjusted operating margin

Note

2019
£m

234.4

1,422.8

16.5%

2018
£m

211.4

1,229.5

17.2%

Adjusted basic and diluted earnings per share
Adjusted basic and diluted earnings per share exclude the impact of non-underlying items on Group profit. Refer to Note 11 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”). The table below presents the
calculation of ROCE.

Note

2019
£m

575.1

664.4

619.8

234.4

2018
restated
£m

554.9

575.1

565.0

211.4

37.8%

37.4%

Opening TNOAV

Closing TNOAV

Average TNOAV

Adjusted operating profit

ROCE

146 Annual report 2019 / Countryside Properties PLC

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(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.

Net assets

Less: intangible assets

Add: deferred tax on intangible assets

TNAV

Tangible net operating asset value (“TNOAV”)
TNOAV is calculated as TNAV excluding net cash/debt. The table below presents the calculation of TNOAV.

TNAV

Less: Net debt/(cash)

TNOAV

Note

21c

2019
£m

899.1

(170.9)

9.6

737.8

2019
£m

737.8

(73.4)

664.4

2018
restated
£m

793.7

(179.5)

5.9

620.1

2018
restated
£m

620.1

(45.0)

575.1

Net debt
Net debt is calculated as borrowings less net cash and cash equivalents, and excludes debt arrangement fees including in borrowings. Refer to Note 21
for the calculation of net debt.

Gearing
Gearing is calculated as net debt divided by net assets. The table below presents the calculation of gearing.

Net debt/(cash)

Net assets

Gearing

Note

21c

2019
£m

(73.4)

899.1

2018
£m

(45.0)

793.7

(8.2)%

(5.7)%

Adjusted gearing
Adjusted gearing is calculated as net debt, including deferred land payments (excluding overage), divided by net assets. The table below presents the
calculation of adjusted gearing.

Net debt/(cash)

Add: Deferred land payments (excluding overage)

Adjusted net debt/(cash)

Net assets

Adjusted gearing

Note

21c

2019
£m

(73.4)

158.3

84.9

899.1

9.4%

2018
£m

(45.0)

127.6

82.6

793.7

10.4%

Countryside Properties PLC / Annual report 2019 147

Shareholder information

Financial calendar 2020

Ex-dividend date

Record date

Payment of final dividend

Annual General Meeting

Trading update

19 December 2019

20 December 2019

7 February 2020

23 January 2020

Five-year summary (unaudited)

Adjusted revenue

Adjusted operating profit

Adjusted operating margin

Reported revenue

Reported operating profit

Reported operating margin

Return on capital employed

Tangible net asset value

Completions (homes)

Private average selling price

Net reservation rates1

Average open sales outlets

Land bank (plots)

2019

2018
restated

2017

2016

2015

£1,422.8m

£1,229.5m

£1,028.8m

£234.4m

£211.4m

£165.3m

16.5%

17.2%

£1,237.1m

£1,018.6m

£170.4m

£149.3m

13.8%

37.8%

14.7%

37.4%

16.1%

£845.8m

£128.9m

15.2%

30.6%

£777.0m

£122.5m

15.8%

£671.3m

£87.3m

13.0%

26.8%

£615.8m

£91.2m

14.8%

£547.5m

£67.9m

12.4%

24.7%

£737.8m

£620.1m

£632.3m

£537.4m

£329.0m

5,733

4,295

3,389

2,657

2,364

£367,000

£402,000

£430,000

£465,000

£385,000

0.84

0.80

0.84

0.78

0.76

49,000

43,523

34,581

27,204

26,213

1. Net reservation rate including bulk sales was 0.95 for the year ended 30 September 2019 (2018: 0.80).

Our advisors
Solicitors
Linklaters LLP
One Silk Street
London
EC2Y 8HQ

Chartered accountants
and statutory auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH

Joint brokers
Barclays Bank PLC
1 Churchill Place
London
E14 5HP

Corporate communications
Brunswick Group LLP
16 Lincoln’s Inn Fields
London
WC2A 3ED

Registrars
Equiniti Registrars
Aspect House
Spencer Road
Lancing
BN99 6DA

Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT

148 Annual report 2019 / Countryside Properties PLC

Countryside Properties PLC’s commitment to environmental issues is reflected
in this Annual Report which has been printed on Symbol Matt Plus and UPM
fine, which are both FSC® certified.

This document was printed by Pureprint Group using its environmental print
technology, with 99% of dry waste diverted from landfill, minimising the impact
of printing on the environment.

The printer is a CarbonNeutral® company. Both the printer and the paper mill
are registered to ISO 14001.

Countryside House
The Drive
Brentwood
Essex CM13 3AT

Telephone: 01277 260000

Email: group@cpplc.com