Countrywide this morning sounded an upbeat note despite announcing losses of £218.2m for last year, up from £207.3m the year before, when it came “uncomfortably close to dissolution”.
Estate agency income fell 16% year on year, principally the result of a lower pipeline at the start of last year.
Overall revenue was £627.1m, compared with £672.8m in 2017. Revenue from sales and lettings was £329,170m last year, compared with £361,479m the year before, with house sales falling to 38,973 across the UK compared with 45,286 in 2017.
Lettings also took a hit, with 64,718 properties under management, down from 68,064. However, Countrywide arranged more mortgages, up 14% in both number (109,379) and value.
However, the company said it has made “significant progress” on its back to basics programme and that its recapitalisation last August has ensured that it has the right long-term capital structure in place to focus on its three-year turnaround programme.
In complicated sums and despite its statutory reporting of losses, Countrywide said it had made an underlying profit of £4.5m, down from an underlying profit of £20.2m in 2017.
The business said it had been affected by market weakness in the last quarter of the year “due to the further uncertainties surrounding Brexit which is affecting both our sector and consumer confidence as a whole”. These headwinds have continued into this year, it said.
As a result, Countrywide said it is experiencing a further slowdown in transactions, especially in London and the south-east, which is affecting its performance in the first quarter of this year. It said that EBITDA – profits after costs are stripped out – in the first half of this year will be affected by between £3m and £5m.
Countrywide also said that the tenant fee ban will cost it around £9m.
However, it said that it expects a stronger performance in the second half of this year, to bring its full year EBITDA in line with that of last year.
Executive chairman Peter Long said: “As a group we are in a stronger position than we have been for some considerable time with sound business fundamentals and, despite the difficult market conditions we are facing, we remain confident in delivering our turnaround.”
He said that this was despite 2018 “undoubtedly” being one of the most challenging years that Countrywide has faced.
Long paid tribute to staff at Countrywide, calling them a first-class team “who will help restore our growth and retain our leading position in the market place”.
In January last year, former CEO Alison Platt left. Long, already chairman, took on an executive role and Paul Creffield became group managing director. In August, a cash call raised £125m.
Yesterday, Countrywide’s share price barely moved, finishing at 10.5p. By mid-morning today the shares dipped to 9p.
In a special briefing to EYE this morning, Long and Creffield emphasised that Countrywide – which came “uncomfortably close to dissolution a year ago” – is only part-way into its three-year turnaround.
Long said there will be bumps in the road, and there are no quick fixes in the journey to restoring Countrywide to “its former glory”.
Creffield said that Countrywide had recruited back 305 staff who had left.
He said that staff who had not re-joined had been “totally disillusioned” and unable to recognise estate agency as they knew it.
The pair told EYE that there is no major branch closure programme on the cards, after 250 branches were shut some two years ago, although there would be individual closures – and openings.
There are also no immediate plans for an online business, after the failure of Countrywide’s last venture. Long said that in the online market, there is “clearly one winner but a lot of question marks” over the other players. It would be a market that Countrywide will keep under review.
There are also no immediate plans to recruit a new CEO, but Long confirmed that the succession issue will be dealt with during the turnaround timetable. Long said: “Paul and I have split the role between us and at the moment we have the right structure in place.”
However, this morning business and bankruptcy specialists Begbies Traynor said that Countrywide needed to do more, and warned that the estate agency industry was in increasing distress.
Partner Julie Palmer said: “Countrywide announced last year that its leadership was changing its strategy with the plan of getting ‘back to basics’.
“However, in this climate there will be little surprise that its results have dipped dramatically. The market is slowing and according to our Red Flag Alert, the number of real estate and property businesses in significant financial distress increased by 9% in 12 months from the start of 2018 to almost 47,000.
“The established leader in the market is finding that its foundations are being chipped away at by newer competitors in the market and it will have to modernise in order to survive.
“With these results, there may have to be more fundamental changes at Countrywide than just getting back to basics.”
Comments (25)
The lettings portfolio of managed properties has shrunk by 5% in a good rental market.
If I was in charge of Countrywide I’d be replacing the National Lettings Director tomorrow morning after a shocking performance like that.
Countrywide should be able to survive but it needs far better national and regional management across the UK to do this.
On the updside the mortgages performance looks solid – perhaps the Mortgages Senior Management can teach the Sales and Lettings Directors how to deliver?
Just wait until the Tenant fee ban kicks in they are doomed, they could of course drop RM and sign up to OTM
Love the blame Brexit stance. Pretty sure I read that other agency firms made a healthy albeit lower profit last year
3 competing brands all under the countrywide banner in one of our locations. One closed several months ago, one has several listings so writing seems on the wall there, and other seems to be ticking over for now.
Well folks, by all means give them a kicking if you wish however at least they are trying to perform Estate Agency rather than the MimeOnliners like Purplebricks who pretend to be “just like estate agents”.
I don’t particularly like Countrywide for documentated reasons however I don’t support kicking the cr*p out of them either.
My 2 For Sale Boards Worth!
As for “Touting Letters” ? It’s the filth of Our Industry and anyone or any company that engages in that particular activity isn’t worthy of our profession.
If caught they should have “Lo-Life” tattooed on their forehead to remind them what they are!!
My other 2 For Sale Boards Worth!
Agreed
In fairness to them at least they are still here and look like they have gone some way in stopping the rot. A year ago it didn’t look like they could survive. They may still be in a very uncomfortable spot but I’m willing to bet the farm they will outlast Purple Bricks. There may be a loud clock ticking at their bank but it must be deafening at PB’s.
If they think last year slow and challenging, then hold on to seats for this year.
Main factors which will affect the agency this year:
Tight Mortgage lending criteria, the affects of the stamp duty, tenant fee ban and “B”.
There’s still business out there, but if CW want to survive they have to close branches which are too close to other CW branches, reduce staff, canvass hard and give the best service they possibly can. They need to have one brand opposed to a number of brands.
Last year Countrywide sold under 39,000 homes in the U.K. Many people, now either retired or moved on, voluntarily or otherwise, will remember that the business used to sell, on average, around 100,000 homes a year (albeit in slightly higher volume National markets) at fees averaging 2%. At that time, Countrywide was accurately described as the industry leader-a title that in all truth it has now relinquished to Connells (and arguably others too) and will be very difficult/impossible to ever recover. Survival in any meaningful sense is probably a far more sensible ambition for a BOD devoid of established industry skills.
Very sad.
Its true,
I know a local M.D. that was let go when the Platt reign began. They have since hired them back and they in turn have recruited regional / area managers that have been kicking around the industry for years. Individuals with zero chance of making it work.
At least employ motivated, hungry staff who understand the market we are now in. Not agents that are lazy and have no pride.
They should be breaking the bank employing good independant agents which understand processes.
Still i am not too bothered, long as i get back the dosh i invested in my shares!
Another marvelous set of results and it was still all the ‘ Spice Girls ‘ fault and nothing to do with me Guv. Sure Alison Platt and her short lived side kick MD made mistakes and should have been pulled back in by the BODS much sooner but hey that’s all in the past now. But don’t worry we know what we are doing. Stroll on.
Doomed, awful office displays, high rents, poor staff, no usp, poor marketing….all they are good at is automated letters immediately after a good agent lists a property “begging” for them to change, but not providing any reason why…pathetic.
The only boards we see in our area are overpriced chaff, most of which no one else wanted. Best of luck.
Have you seen those letters? they are truly awful. Its like sending a letter for the sake of it.
Meanwhile, on the bridge of CW Titanic, as she sets sail.
‘Be careful Captain, there could be icebergs’
‘They will present no problem to us. Navigator Platt will steer us safely’
Some hours later…
‘Look out Captain, there’s a huge iceberg in our path.
‘Good grief! Throw the navigator overboard immediately! Put the helm over and reverse our course!
Will we make it Captain?
‘I don’t know. Perhaps we shall, or perhaps it’s too late. We shall give it our best shot. Only time will tell.’
Lions, lead by donkeys!?
Back to basics he says, or is it the road to predition?
When arrived at destination “Basics” then what?
Is it to sit tight, keep twiddling the levers here and there and wait for “Basics 2” etc, etc..
The announcement reads like a political speech.
This statement should have been written by an entrepreneur who knows how to reignite the companies reach through their brands with new dynamic profit lines that appeal to their customers and most importantly the wider market.
This would require taking the blinkers off, so probably a “no go”.
I would love that job. Back to basics . It’s the only way.
The trouble we now have is most branches can only afford 3 staff and you need 4 to cope with sickness , laziness , new staff training etc.
This is their weakness. The sole traders who compete against them (I.e. the good staff they used to have but got fed up with being treated like ****) are now doing 60 hour weeks.
U can’t buy that kind of dedication.
Something that will also beat bricks in the end.
True, self starter , independents….
God blesses you. Well done.
Poor form boys, at least they have slown down the flow of losses, it is tough out there and a turn around of this level won’t happen in a one year nor a three year period but they can, for the LSE look stronger and show positive signs of a comeback.
it seems if someone’s doing better than you then you pan them and if they are worse than you then you pan them! Small minds or just kidding yourself that you are ok eh?
I agree, there is far too much negativity on these boards. I do wonder how people have the time to spend going back and forth on the comments section all day!
But going back to the article, will they have the time to turn it around? They are hemorrhaging money at the moment and will be allegedly losing a further £1m a month once the admin fee ban arrives.
Not looking rosy from my position!
Now back to work!
They need to turn things round by £218 million before they make a profit. They’ve £9 million of income disappearing on 1st June. I would not be comfortable were I sat in a loss making branch.
Most of this is fallout from August:-
Loss after tax of £218.2 million (2017: £207.3 million(5)) reflecting £245.4 million of principally non-cash exceptional charges for goodwill, intangible and other asset impairments.
They have started to recruit frontline staff again (the local CW office was empty six months ago and it now has a full complement of worker bees).
Depending on the BOD’s personal incentive plans, they may write-off more goodwill/intangibles in 2019 or even reduce the debt. After that the current leadership will be taking some big fat bonuses for turning the ship around !
6 more weeks I bet until further branch closures are announced.
Hidden in th RNS amongst the fluff of their very own Viz character Baxter Basics is that the cash cow the jewel in the crown Lambert Smith Hampton is under the cosh
“Our commercial business, Lambert Smith Hampton, is experiencing significant slowdown in its transactional market as a result of the political and economic uncertainty surrounding Brexit. ”
Having said that at least they seem to have installed a floor into the company’s drop it must be very disheartening though for the talented individuals driving the individual brands pedalling like mad to service the reduced but not inconsiderable debt of £70m for the forseeable future.Incurred by a set of BODS who are still very much on the premises
What’s alison Platt doing now? In the real world she’d be selling her house to get her company out of debt.
Public company model is flawed. Gamble . if it goes wrong, just step down.
Nice job if u can blag it. #ceoWorld
Like all giants, they don’t and can’t move quickly. There is still that modest profit, but if the assessment is correct about the loss of tenancy fees to the tune of £9m that puts them in a loss and that assumes their current sales and income rate remains the same! Any loss of fees or momentum will hit hard with those debts and their meter ticks very quickly 24/7
Their pipelines like all of ours will be taking even longer as lenders, solicitors and surveyors become more obsessed by shadows and fear….Countrywide is still heading for the eye of the storm. It is in slightly better shape than a year ago, so rest assured their cross selling of services and pursuit of mortgages will be aggressively administered now. The Land and New Homes cash cow will face challenges too, not least of which is the increased competition from the other corporates.
I do like the insight from chief vulture at Begbies Traynor, stating that there are now 47,000 struggling agents and property businesses. I wonder what their definition of a property business is, as their number is more than twice the number of estate agents in existence in the whole country. Are you telling little porkies smart receivership people!?