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 said this morning it was immediately going to raise around £40m to roll out its digital offering, suggesting the possiblity of a seriously well funded challenge to Purplebricks in the UK – see our UPDATE at the foot of this story as to this share placing.
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. The number of closures was more than had previously been disclosed.
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”.
UPDATE: Countrywide announced the completion of its share placing mid-morning today. A total of 21,610,467 new shares representing 10% of the company’s current market capitalisation have raised £37.818m before expenses. These new shares are due to be admitted to the stock exchange on March 13.
‘In total, the group sold 66,210 homes last year – not dissimilar to the 67,677 sold the year before.’
Does anyone know how many branches this was amongst?
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Circa 1000
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they’d be better off spending money on rebrand to all the same name. Do some adverts killing purplebricks claims and then offer ‘a range of fees to suit cstomers’.
email me if you need an MD. Easy job.
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But still showing real, tangible, profits. As more agents begin to offer a budget, ‘fee up-front’ service, that sector of the market is going to become even more difficult to compete in and, make a profit from.
The current call-centre market share sector is running at just 4%, a fall from a claimed 6% in 2016. This suggests that the market is maturing at that share and may even be contracting if the 6% figure was, in fact, ever accurate.
Countrywides experiment appears to be a disaster with many good people leaving* and money seemingly wasted however, history will judge the experiment. What is clear is that they have the advantage of doing so from a position of profitable market share.
*One of whom now works alongside me.
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So 2016 revenue £737 m( 2015 £733.7m ) remaining flat In other words all the additional revenue arriving from those buinesses which were acquired last year with borrowed monies has effectively vanished.
No wonder they are seeking a placing They have little choice Bank clearly wants their money back Revenue at Lambert Smith Hampton has fallen off a cliff meaning that their hoped for sale has not materialised
The least she can do is to halve her salary as the placing will further dilute existing shareholder,s investments
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So, in spite of introducing their online offering they’ve sold the same number of houses YoY. Doesn’t this suggest it’s simply cannibalising their existing business?
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If countrywide were to go in the right innovative direction rather than the ‘knee jerk’ one, they would still have plenty of profit in the bag to help make a huge turnaround in their fortunes. I just think they don’t know which one is the right way.
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Spot on!
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Time to go Platt your experiment is not working!
Agency is not retail!
Is this including the 29 million sale of zoopla shares?
If it is CW lost money.
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“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”.
I have seen some swansongs in my time but this is a clever one!
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“suggesting a seriously well-funded challenge to Purplebricks”.That’s a bit like jumping off a tall building head first just to see who can hit the ground first; there are some things that don’t need to be challenged.
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Brilliant!
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Surely everyone knows the sector companies need a u.s.p. which a “digital roll out” is not, it looks more like they are joining the race to the bottom. Where’s the innovation going to come from?
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****!
Bye Alison and you retailers !
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I’m sure Bob and the rest of the old senior team are reading this and gently nodding their heads as they all knew it was the wrong direction to go, yet it seems Mrs Platt wouldn’t listen to any of them, instead cleared them out and brought in a team with zero understanding of the industry. Would love to hear Bob Scarfs views right now, you out there Bob??
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i echo that.
Bob if you are reading be lovely to hear your thoughts on this.
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……they’d achieve much better results if all of their branches used Callwell.co.uk to help them turn emails into phone calls…..
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Alison Platt, chief executive, said: Countrywide is evolving at pace.
Should not that be devolving at pace?
If you slash an average fee of say £4000 to £1000 you have to sell four times more property to stay the same?
66,000 x 4 is 264,000 transactions, in a falling market?
That is say 264 listings per branch at existing branch levels per year?
In my patch there are two CW branches that is 528 listing between them.
I estimate that in my main patch there were less than 200 listings last year?
As I have said before, to have a sustainable business, you cannot beat your local independent full service estate agent on price in the average market?
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PS. Is the only way that this strategy stands a chance are if CW were bought by the largest portal which is unlikely due to competition issues…..or were supplied with real time listing data or pre-listing data generated through other paying member agents property adverts and their own real time feed or instant alert initiatives?
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PS. Is the only way that this strategy stands a chance are if CW were bought by the largest portal which is unlikely due to competition issues…..or were supplied with real time listing data or pre-listing data generated through other paying member agents property adverts, their own real time feed or instant alert initiatives?
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Devolving or dissolving????? Both I suspect.
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Simply awful which ever way you read these results. I cannot believe such a well respected and market leading business has been trashed in less than 3 years. I also hear that senior management bonuses are deferred until April this year ( presumably to keep them off last years figures ) that went down well apparently with the hardworking Branch Managers concerned. NOT. Chasing the PB model is mis-guided and i understand figures are not to be discussed on a Branch by Branch basis and have never been shared by the people in the know so what does that tell you about how succesful it is so far??? At least the sun is shining today.
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Fantastic news. I ran a CW branch for 6 months in late 2014. A horrendous experience. If I posted my CW story up here it’d get taken down pretty sharpish. In my opinion definitely not a company that look after their staff. Anyway, that’s a different story.
During my six months with CW there was a real feeling throughout the company that the management team really didn’t have a Scooby. It was us, the estate agents and them, the retailers. That feeling is still there. Hardened, experienced, loyal estate agents being managed and led by a team of buddy’s who’ve never actually worked at the coal face. Long term, a company cannot succeed without a management team who have the complete respect and trust of the staff. CW’s leaders don’t have that. Things will only get worse 🙂
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I was outside a CW branch on Monday in a nice town with a strong average house price (certainly for that part of the country – circa £400k), the branch looked very nice, I’m guessing it was refurbished over the last couple of years and on huge posters covering the windows showed their £995 online offer. It was like John Lewis (I’m not suggesting CW are John Lewis by the way!) had decided to venture into the pound shop market. So assuming a 1.25% fee they are going to sacrifice over £4K on fees and if they say they both will work hand in hand they are mad, if you sign up an online only customer who then calls in to complain about something are they really going to point at the T’s and C’s and show them the door!!
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There are ways to get commissions up. It’s not hard if pitched to sellers in the right way. Commissions could easily be 1.5%-2.5% given the right pitch
With CW sales of 66,210 homes / 67,677 homes, the fear must be if a digital trend emerges where 20% of sellers go in the next 3-5 years to budget online £500-800 options.
If so 15,000-16,000 at £500-800-£1,000) could be tragic if 45,000 only achieve 1% fees.
The market is likely to go 2 ways. Very budget/passive models at £hundreds of pounds and bespoke better serviced marketing via experienced or well trained agents achieving more towards 2% by opening a property to more prospective buyers.
Sticking at 1% sole and competing with the race to ground zero won’t bake the cake.
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“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.”
She can prepare my CV anytime.
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Cringey use of corporate jargon to hide obvious and catastrophic failures. You have to applaud the audacious optimism.
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Is Alison Platt one of them ladies that the Polish MEP was on about yesterday morning?
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So a profit slump and emergency share placement due to the fall in business and the CEO is still in place. Looks like the Non-Executives are doing a pretty poor job of representing the shareholders.
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Outstanding job. How do you ‘square’ a plan that you’ve been told is flawed and now proves to be with staying on and rushing down a route that will damage further what your business is about? Connells (like em or loathe em) do the sensible thing and buy a ‘digital’ platform. The punters therefore are not confused by some lister trying to persuade (badly in most cases I suspect) a vendor and soon to be landlords no doubt, that they can do the lot! Cheap, not cheap, whatever youlike sir. We’re all things to all people!!!! Desperate and ill conceived.
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Well at least they have raised some money which wont touch the sides the banks will still want to seehow they are going to get their money back She will have a very small window, However at 175p per share and with dilution the existing shareholders are shafted Seems everyone is suffering except Doors to Manual Platt and her bloated salary which looks less deserving by the minute
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Anyone there or close, knows it’s a disaster! Spin it how you want, it is lurching toward oblivion with no coherent leadership or idea of what evolution of agency is or should be.
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There is simply one question I have to ask. If all the staff at the cliff face, all the experienced managers who have taken the brunt of the changes, the management staff, ODs, FDs and MDs (those wise, experienced estate agents who were purged), administrative and support staff too, saw this coming, how on earth can the shareholders not see that Alison Platt is/has been making the most magnificent Horlicks of it all? How can she be allowed to continue?
Just asking ….
Even if you try – and it is very hard – to seek out a balanced and rational view of Countrywide, you end up scratching your head and you then realise that you are subconsciously shaking it i bewilderment.
The bizarre thing is that she will probably go shortly, her exit strategy may even already be in place, the press will praise her industry leadership and vision. She will move on, unblemished, to some other highly paid job. I doubt she can risk being at the helm for much longer.
There are a bunch of disciples and henchmen in the middle ranks of management who have kept their heads low and supported the programme, cynically lining their own coffers, who should hang their heads in shame. If the great plan fails, I hope someone cleans them out swiftly too. It is a shame they did not have the courage to stand up and fight for the various companies that have been trashed on the way.
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Very interesting points made. Not the first time though that those holding significant sums have spent Big in relation to property agency. Prudential, Halifax, GA etc. All investors money spent unwisely. It is alarming though that no one appears takes a look at the history of that debacle and thinks carefully about engaging a CEO with a distinct lack of experience!
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If the few major shareholders have bought into the ‘plan’ then they will be prepared to see the share price fall – in the expectation of greater gains when the ‘plan’ works.
Or doesn’t.
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By crossing bows with PB, they might just take the last bit of wind luffing the PB sails, but just like the Titanic the mighty CW weighanchors, cast off and tragically set course to the bottom of the deep blue sea. Bon Voyage.
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The CWD hybrid model is a poor copy of what’s out there already and has been out there for some time. Its a copy and it’s being poorly executed. Mrs Platt is clinging in some vain hope that it will save the organisation when it’s her foolish pursuit of the ‘agency is retail’ mantra that is primarily causing the problems. When your main brands are identifying themselves as ‘cheap agency’, reversing that trend to get your fees up is very difficult.
Question; how do you do more income in 2016 than 2015 and get half the profit? How bad do you have to be to manage that feat?
No mention of the £29,000,000 from the zoopla share either!
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The question is who decided Ms Platt should have been offered the job in the first place, you have to be stupid to take such a radical move with a strong sound proposition but incompetent and reckless to let it continue. Whoever put her in charge are the ones the shareholders should be looking for the heads of. She must have shared her vision for the future with the board before they appointed her. Taking directors remuneration comes with responsibilities. Otherwise they are just like some old general sitting up upon his horse watching from a distance while the soldiers March to their slaughter.
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Very well put FYV. It is very curious. However, as the additional issue has been taken up by existing institutional holders of the shares, it would seem that they are content with the plan. It certainly hasn’t appeared a worthwhile one yet as anyone there can tell you. Also and sadly; this takes no account of the casualties at the grass roots. Reduced earning capacity and enjoyment of their working environment.
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Are they really only selling 5-6 properties per month per branch? Seems to be allot of dead wood that still needs cutting out. Seems that many of the PEOPLE that we’re making the money for Countrywide are no longer there.
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