Shares in Countrywide plunged to just 10p this morning after it announced its results for the six months to the end of June and also announced it is looking to raise £140m in its emergency fund-raise.
This morning, according to the London stock exchange, Countrywide’s market capitalisation is less, at £118.87m, than both its debt and what it plans to raise.
It has also announced that Paul Creffield has been appointed to the board in the role of group managing director, while Paul Chapman becomes chief operating officer. There is no news of any recruitment plan for a CEO, and Peter Long – also chairman of embattled Royal Mail – remains Countrywide’s executive chairman.
Countrywide said that in the first half of this year, group income fell by 9% to £303.6m, with adjusted EBITDA of £10.7m – slightly better than recent forecasts but compared with £27.8m for the same period a year ago.
Losses after tax were £205.8m, compared with a post-tax loss of £500,000 in the first six months of last year.
Net debt as at June 20 had climbed to £211.7m, up from £196.4m as at the end of December.
However, Countrywide said that it has made “significant progress in building back industry expertise and staffing” this year and paid tribute to its “able and dedicated colleagues”. Its former CEO Alison Platt quit in January after a failed ‘retail’ experiment.
Countrywide also said that its sales pipeline was down 9% year on year, but that compared with a 15% decrease at the end of last December; its register of properties was up 3%, compared with a year on year decrease of 24% as at the end of December.
It sold 22,026 properties in the first half of this year, down from 27,100 for the same period in 2017. It had 124,767 properties under management, compared with 126,728.
In a complicated capital refinancing plan, also announced this morning, Countrywide proposes a placing of more shares at 10p each to reduce debt by 60%. A prospectus is due to be published later today. The issue of new shares must first get shareholder approval at a meeting on August 28.
Yesterday, Countrywide share prices ended up 2.7%, at just under 50p.
Executive chairman Peter Long said: “The capital refinancing announced today is a significant milestone for the group.
“It will enable us to build upon the progress we have made to date on our three-year recovery plan as we deliver our return to growth strategy.
“Although it is still very early in the turnaround, we are encouraged by the operational improvements that we are making and the tangible results that are being achieved. We now have industry expertise and experience across the group and I am delighted that we have further strengthened the board and executive management team through internal promotion.
“With well-known and trusted brands, together with our able and dedicated colleagues we have laid down a strong foundation to build upon and I am confident that we will return Countrywide to profitable growth and long-term success.”
Yesterday evening, Peter Everett, head of prime and country sales at Countrywide brand Hamptons, posted: “Just tallying up the @HamptonsInt Country sales numbers for July and delighted to report that we’ve seen a 11% uptick on July last year. Market share growth on new instructions too for the month. All down to our fantastic people.”
At 9am this morning, the shares were around 22p, having lost over 55% of their value. Shortly before 11am, they were just below 15p. At one stage they plunged to just 10p.
Comments (37)
This is going in one direction and that is insolvency..
I dare say some out of country money may swoop in to try and save this. BUT with coming uncertainty around brexit, the winter market and letting fee changes I am confident raising £140,000,000 will not be enough.
The level of the offering is so low that one can only assume they have has a less than enthusiastic response in the whipping of potential investors.
Undoubtedly there will be a talent drain on the back of these results further exacerbating the issue.
Exactly Paul, the debt, the raise and the death spiral!
I think the talent drained a long time ago which is part of the reason they are where they are
I dont think its necessarily the talent, Lets be honest they still have the Harry Hill playbook which takes the lowest neg and provided they follow the instructions on the tin they get a certain result.
The problem they have is the staff churn and lack of identity.
So much pressure and expectation and the staff are turning over more. Couple this with an identity of are we online, high street, premium or budget? the public have no idea what they are either.
CW was always a pretty run of the mill company with a single promise, more exposure gets you a better price which is how we justify fees.
They could replace staff easily as it was a coherent message going back years.
Lets be honest, any real talent leaves any corporate to set up their own business or take a partnership in an independent.
Outside of London given the ever changing commission structure i doubt very few ‘managers’ earn over 50k most probably mid to late 30k
Given the loss of market share i bet most negs outside London are only adding 5 -6k to their basics which are low to start.
The truth is why would anybody join CW as staff and why would the public instruct them? – There lies the problem along with the investment world having no confidence in them and the market in general. Interest rate rises and tenant fee bans certainly will not help.
I sympathised with the treatment of Alison Platt by posters here – but the more I see the unfolding of what she has done, the more I realise that she took a punt on people’s money, passion and – in a lot of cases – their careers.
All because of her ego.
In hindsight, I think she should be ashamed of her strategy. I don’t care for the corporates – they’re money grabbing b@st@ards – but I do care for people who just need a job and to make a living.
There was a groupthink mentality based on those who have been saying agency can be disrupted.
It’s all going online innit? with huge wads of cash being thrown at something investors don’t properly understand is a phase our industry is going through.
You only have to look at the cash and TV advertising thrown at Emoov to see how this is going to end up. Something over £20million in investment and TV advertising to have a register that’s smaller than several regional independents.
If Woodford suddenly exited Purplebricks how long would that circus last without investor cash buying listings? Not long is my guess
Countrywide had a dabble in disruption, worked out it was a flawed strategy and have got out. A £140m raise is a fair achievement and shows faith in the team as it is now.
Robert, can you confirm that Emoov and Tepilo’s new instructions are way down following the merger? It looks as though things are not all well there.
Let’s say i’ts not a register I’d be proud of if I’d had all that investment, all that celebrity and now all of that TV advertising.
Alison Platt created a groupthink mentality by forcing out any senior management who dared disagree with her. The almost monthly changing of commission packages and not paying year end bonuses led to an exodus at Branch Manager level, in my patch that left Branch Managers who were totally unmotivated and quite happy to sit there earning their basic salary with no incentive or desire to drive the business forward.
I can only speak of what i know, but from what I see and hear there is a huge lack of experienced motivated indviduals at branch level and in my opinion that will not be easy to rectify.
Leadership and motivation will repair the damage that’s been done far easier than attempting to get the disrupter model to work.
Sorry is a difficult word to say but it is usually rewarded with forgiveness, relief and respect.
Well, i could not resist, just purchased a block at 15p
I think this is buying money but i maybe wrong.
Sales and lettings posted a loss of £1.8m. I suspect that if they were actually separated out you would see that sales posted a very large loss and that lettings actually made a profit. Alison Platt really did do a magnificent job of restructuring the company with her retail approach. The main board are to blame by appointing her in the first place and it really is a case of the clueless appointing someone who is even more clueless. Estate Agency is not rocket science it is about who you have in the office on the high street. Unfortunately most of the big companies are now run by bean counters and management consultants, in the old days the estate agent employed the bean counters and the management consultants to give them advice so what happened? The so called professional advisers thought they could do the job for less money and therefore improve the bottom line. Who needs expensive staff, we can replace them with cheap ones or a computer. Of course you loose all your local knowledge and contacts but hey we can gather that information from the internet and use an algorithm (whatever that really means) to do it for nothing. The only problem with this is that Mr & Mrs home owner want to speak with someone who knows about their home and their needs at the same time as flattering their egos.
The underlying issues are they spent too much buying all the lettings businesses to diversify the income at a time their performance was being flattered by the London market income and new homes. Mortgage broking and surveying are good steady earners and LSH is also a useful biz that is profitable. Like all things in life, the profit is in the purchase and they spectacularly missed it and now have killer debt!
Whilst i am not disagreeing with you 40 year old you have to look at when the rot started and accelerated.
First we had Open all hours Granville who was an ex Lloyds BDM manager who thought he was a big shot in the city.
Then we had most of the MDs and FSDs shot a t dawn under heir fuehrer then Alison joined.
When her retail bit was failing expertise had all but gone and we were left with a turnover of staff at over 50% (normal agency) and trainers being people with no idea based on a book written with someone with no idea.
There has not been a plan since Harry and Gerry left
The new MD for FS was an ex Lloyds guy who knew nowt about brokering and had it pointed out to him that life sales has dramatically fallen. PS it was an accountant who flagged it up! One of the main protagonists was an ex B&B guy who lost all the laptops when B&B joined and had a brokerage operating under his nose from a high street branch. You couldn’t make this stuff up if you tried.
Amazingly he became a right hand man.
I hope countrywide recover for the sake of the industry as their demise would hit right move, zoopla and suppliers etc. But god knows where you start.
Horrible time for their staff. How would you feel if you were standing on the Titanic?
I’d be looking round for Leo and booting Kate of that darn door so we could fit! Selfish moo.
Share price in free fall, 23p
If the good managers and negs were not looking for the door they will be now.
The cutbacks and pressure put on front line staff will be unbearable going forward.
“Losses after tax were £205.8m, compared with a post-tax loss of £500,000.” – Surely that is not correct?
Rivero
Clearing all the rubbish off the Balance Sheet –
“Loss after tax of £205.8 million (2017: £0.5 million loss(3)) reflecting £226.8 million of exceptional costs of principally non-cash exceptional charges for goodwill, intangible and tangible asset impairments (H1 2017: £2.7 million)”
£226 million of goodwill ?!?!?!? Thats a lot of goodwill
AgentQ73
Only £45m was Goodwill with a further £126m for Brand impairments.
Still leaves £235m in Goodwill and £52M in Brands for the next CEO to do a kitchen-sink job on !
Ive no idea what that means but i am guesing its not great.
Whenever there is a change in corporate leader, they get the bean counter to clear out everything which is slightly iffy (bar the kitchen-sink !) and blame the bad results on the previous regime.
But how is declaring that kind of loss going to help their fundraising? Is it because the shares will need to be dirt cheap anyway so it’s a ‘good time to bury bad news’ type scenario?
See next story – they already have the funds and key players get access to a generous allocation of cheap shares.
Sadly, the small investors will have to suck it up.
Share price now under 20p! Current fall is 63% hardly surprising with a 10p per share placement at more than the current value of the whole company at close of business last night. Things not looking too good today i fear.
Share price back up to 22p at 8:51am
Just in.
Raising at 80% discount to SP, 10p ouch.
With net debt of £211.7 m (mcap = £118m).
I wonder if the analyst Mr codling from Jefferies is still bullish on CWD?
Hi Dom
Countrywide has been a slow motion car crash for years.
Care to answer my question about PB turnover of LPEs from the last time you posted?
dompritch134
What time are you playing golf today?
Could you ask one of your PB contacts if the dramatic fall in instruction revenue to £666 per listing (less than the min. fee of £707.50 plus VAT) is due to customer refunds?
Thankyou
Really Dom, and you say your not directly involved in the industry but a landlord?, a property investor? methinks you work for purple patch
Some comments in this thread are saying this raise is showing confidence in the BODS, what at a 80% discount to the SP, what planet are they on? This is pure desperation and last throw of the dice before this firm is broken up.
My word some vested interests are apparent today.
Just ignoring the questions above then ?
@AgentQ73 This is an article about CWD capital raising.
That doesnt stop you answering here or are you going to go back to the article I am talking about and answer there ?
So how many companies have you turned around Dom Boy?
Give them a few extra days to dress it up.