Countryside issues profit warning over botched expansion

Countryside Partnerships has blamed the botched integration of a rival housebuilder and overambitious expansion plans for its latest profit warning. The FTSE 250 developer said it expected annual operating profit of around £150m, 25% less than analysts expected. It also revealed that operating profit between October and March, the first half of its financial year, had fallen by 42% to £45.6m from £78.6m a year earlier. Countryside shares, which began the year above 450p, fell another 14.8% to 228p last night. Iain McPherson, the group’s chief executive, agreed to leave in January after a dire trading update knocked more than a fifth off its share price. In the wake of that move, John Martin, the chairman who is standing in as chief executive until a replacement is found, launched a review of the business to find out what had been going wrong. Among the key findings published yesterday was an admission that Countryside had “failed to realise the benefits” of its acquisition of Westleigh, a Leicester-based builder of affordable housing for which it paid £135m four years ago. Margins at Westleigh developments had been “very low”, while some of its sites were “not completed to Countryside’s high standards”. Martin said: “These are the poorest-performing sites in our business.” He added: “I think we have been a little bit overambitious in our expansion plans. We have spread ourselves a bit too thinly.” Countryside plans to scale back its expansion plans and is merging some of its newer offices with others nearby. That will help to shave £15m a year from its cost base. Alongside the conclusions of the review, Countryside confirmed that it had signed up to the government’s building safety pledge to fix fire safety issues on the 290 high-rise blocks that it had built over the past 30 years. Previously, it had set aside £41m to fund such works, but it has yet to decide how much additional expense will result from agreeing to the government’s request. The Times (£)