Pre-tax profits at Countrywide, the UK’s largest agent, fell by well over half last year, to £19.5m, from £47.7m the year before. The firm is now immediately going to raise around £40m to roll out its digital offering, suggesting a seriously well-funded challenge to Purplebricks in this country.
Announcing its annual results for last year this morning, the group’s total income was slightly up last year, at £737m companed with £733m the year before.
But all measures of profit were significally down – EBITDA fell from £113m to £83m, and operating profits from £53.8m to £28.8m. There will be no final dividend.
In total, the group sold 66,210 homes last year – not dissimilar to the 67,677 sold the year before. Altogether restructuring costs were over £47m, which included just over £8m on redundancies and nearly £16m on 200 branch closures.
It warned that this year, sales market volatility is likely to continue, with “expected headwinds” from the ban on tenants fees and a “pressured landlord environment”. It will focus on its digital roll-out, with its online offering due to be in half – some 400 – of its offices by June. It forecasts a fall in sales transactions this year and a small fall in house prices across the country.
Alison Platt, chief executive, said: “Countrywide is evolving at pace, with a clear strategy to create a business with a cost base that better reflects market conditions and a differentiated, customer centric offer available to customers across the UK.
“Looking forward we expect difficult market conditions for the foreseeable future ensuring that the emphasis for 2017 will remain on our strong plans for change. Over the medium term our diverse revenues, nationwide footprint and portfolio of high quality brands gives us confidence that Countrywide can build on its leadership position and deliver sustainable, profitable growth.“
Peter Long, Countrywide chairman, said: “The company is at a critical point in its evolution and is determined to reinforce its leadership by developing a business that better reflects the needs of our customers.
“We accept that the market will continue to be constrained and that we need to transform our business, but we do so from a position of strength.”
He said “the journey” ahead will include “defining a new opeerating model which will include resizing the retail estate, updating the technology platform and driving down our cost base”.
In a separate announcement to the stock exchange this morning, the firm said it is also placing up to 21,610,467 new shares, representing 10% of the company’s existing issued ordinary share capital. The net proceeds will be used to accelerate the group’s digital roll-out and “strengthen the company’s balance sheet”.
It said that extending into next year, “Countrywide’s plans are to pursue fewer, digitally enabled brands across a multichannel network – ultimately leading to a more sustainable cost base”.