Commitment comes as firm announces plan to invest £150m on growth after surprise fundraise
Housebuilder Countryside is to invest £20m in a 3,500-home a-year modular housing factory after yesterday raising £250m on the stock market.
Countryside confirmed this morning that it’s surprise fund-raise, announced yesterday afternoon after the markets had closed, had been successful, netting the company £250m which would be used to pay down debt and invest in growth.
The fund-raise came as the firm issued a trading update for the three months from April showing housing completions at less than half the level of the previous year, and as it nevertheless laid out a £150m programme to invest in growing its partnerships business.
The firm said the £150m growth programme, in part enabled by the fund-raise, will include a £20m investment in a wholly new modular housing factory designed to supply its partnerships housing business.
While Countryside has previously said it hoped to build a second factory, it said yesterday it had now received planning permission for a 3,500-homes a-year new factory in Bardon, Leicestershire and was pressing ahead with construction. It expects to be able to open the facility in the autumn of 2021.
The factory will be Countryside’s second fully modular housing factory, with its first facility in Warrington (pictured, above, left) having capacity for 1,500 homes per year and the firm also having a timber frame panel factory in Leicester. Countryside said it expected the new facility to payback on its investment within three years, and that it was setting up a “manufacturing” division within the business to oversee the growing investment in modern construction methods.
The firm said the new factory “will further progress the Group’s strategy to have greater security over delivery and increased build speed.”
In addition, Countryside said the money raised will be used to invest in opening up new regions in its Partnerships business, which delivers housing schemes in conjunction with councils and housing associations. The firm said Countryside will invest £80m in opening regions in South London, the Chilterns and the South west, and spend £50m accelerating delivery of eight schemes in the partnerships business’s southern division.
Countryside will also restructure the partnerships business to enable the growth, splitting the current Partnerships North division into a two divisions – with the original division limited to covering the Manchester, Merseyside and Yorkshire regions, and a new Partnerships Midlands division incorporating regions in the East, West and South Midlands.
Despite these growth plans, the firm’s third quarter trading update showed the severe impact of the covid-crisis on Countryside’s business in the three months to the end of July, which covers the majority of the full lockdown period. It said it had built 449 homes, down 57% on the same period last year, with new sales per week running at around half the normal level, with 0.53 sales per site per week compared to a figure of 1 in 2019.
The firm’s private sale business was worst hit, with just 99 homes completed in the period, compared to 287 in the third quarter of 2019. However, Countryside said it is now operating at 85% of normal production capacity and that this will rise to 100% “over the course of the coming months”. Private reservations in the last four weeks, it said, had returned to a normal level of 0.7 per site per week.
It said the planned expansion of its partnerships division was based on the fact it had secured work equivalent to nine years work at 2019 production levels, with a further 3,376 plots secured in the quarter, taking the total to 40,267.
The firm said the outlook for the market “remains uncertain” but that “encouraged by trading performance in recent weeks.”
The £1.4bn-turnover housebuilder announced plans for a rapid fund-raise at 4.30pm yesterday, raising £250m by issuing almost 75 million shares at a 7% discount to yesterday’s closing share price. The new shares represent approximately 16.6 per cent of the Company’s issued share capital immediately prior to the placing. The move to raise money by Countryside follows similar action by other housebuilders, most notable Taylor Wimpey, which raised £500m in June to embark on a land-buying programme.
Iain McPherson, group chief executive, said: “Whilst we have seen significant disruption through the quarter, our return to site was well executed and we have seen increased interest from customers in recent weeks. Our Partnerships business and its focus on Affordable and PRS homes continues to show particular resilience. The creation of the Midlands division along with progress on our second modular panel factory will create the platform to continue to grow our business in the medium-term.