Yesterday major shareholder Browning West, which owns 9.4% of the business, pressed for the departure of chair David Howell and for the company to move away from housebuilding to focus on its Partnerships regeneration arm.
Sure enough, today saw Howell announce he would step down in 2021 and the company has appointed Rothschild & Co to ‘advise the board on the best time and process to realise best value from the separation of Housebuilding from the group’.
The Partnerships unit specialises in urban regeneration of public sector land, delivering private, affordable and PRS homes in partnership with local authorities and housing associations. It operates in and around London, the Midlands and North West England. It expanded into the East Midlands and Yorkshire with the acquisition of Westleigh in 2018.
WHAT WERE THE NUMBERS LIKE?
The strategic update comes as the company swung to a loss in 2020, but said it was on track to meet the upper end of operating profit expectations for 2021 and pledged to reinstate its dividend next year.
For the year ended 30 September 2020, pre-tax loss was £1.9 million compared with a profit of £203.6 million as revenue fell 28% to £829 million year-on-year.
The annual loss was blamed on disruptions to homebuilding activity amid the Covid-19 lockdown earlier this year.
Total completions fell 29% to 4,053, and private selling price was flat at £364,000 amid deflation within the housebuilding division. Total forward order book was up 16% to £948.9m.
The company said it intended to reinstate the dividend in 2021, though added that it would confirm the level of dividend pay-out at the half year results.
AJ Bell investment director Russ Mould said: ‘You can see the logic in a strategy of becoming a pure regeneration play, given it is a leading operator in this market and has the experience to make public/private partnerships work. Whereas in housebuilding it lacks the scale of some of its peer group.
‘And while some rivals have returned to the dividend list, this looks further off at Countryside and even when pay-outs return it sounds like the company may prioritise putting cash into growing the Partnerships business.’