TIDMCWD
RNS Number : 1516R
Countrywide PLC
26 June 2020
26 June 2020
Countrywide plc (LSE: CWD)
Countrywide plc
Trading update
Ahead of its AGM today, Countrywide plc, a leading provider of
residential property services, financial services and surveying and
valuations, presents a trading update for the five months to May
2020 and also current key performance indicators following the
easing of the lockdown of the housing market in England. The
restrictions on the housing market in Wales were eased from 22 June
and will be eased in Scotland from 29 June 2020, and the Group is
preparing to re-open its branches in those regions.
Summary
The Group has delivered a resilient financial performance for
the five months to May 2020, benefitting from the strong pipeline
from the first 12 weeks of the year in sales, lettings, financial
services and conveyancing. During lockdown, the Group took swift
and decisive action to manage its cost base and liquidity, with 78%
of colleagues furloughed under the Government's Coronavirus Job
Retention Scheme. We continue to monitor activity levels daily to
ensure we are able to meet customer demand and optimise the Group's
financial position and, following the re-opening of the branches in
England from 18 May, have seen clear evidence of increased
transactions in the market, and have seen more than 3,000
colleagues return to work.
Group: continuing operations(1)
-- Group income was GBP142.5 million (2019: GBP200.0 million) with
the year-on-year decline reflecting the closure of all branches
on 23 March 2020, in accordance with the Government's lockdown
guidance. Whilst the announcement in respect of easing of the
lockdown was made on 12 May, branches in England began to re-open
from 18 May onwards following comprehensive risk assessments
-- Group adjusted EBITDA (2) GBP7.4 million (2019: GBP10.0 million)
after absorbing GBP8.1 million gross impact of the tenant fee
ban
-- Adjusted EBITDA margins held at 5% for the five months to May
(2019: 5%)
Business unit performance:
Sales & Lettings:
May year to date:
-- Total income was GBP94.8 million (2019: GBP131.0 million)
-- Adjusted EBITDA was GBP5.7 million (2019: GBP3.8 million), up
49% after absorbing GBP8.1 million gross impact of the tenant
fee ban
Since the easing of lockdown:
-- The Group has converted the majority of its existing instructions
on Rightmove and Zoopla to showcase properties through virtual
online viewings and video tours, while all new instructions offer
these viewing media
-- We have accelerated the move to centralised lead handling, enabling
a faster response to customers through telephony, web-chat and
video for buyers or sellers
-- As at 26 June 70% of branches have been risk assessed, certified
COVID-secure, opened and with all meetings pre-arranged by appointment
only
-- Leading KPIs show clear evidence of increased transaction levels
week-on-week with the first four full weeks of trading in England:
-- May year-to-date instructions are back to 60% of 2019 levels
with last week running at 94% of 2019 levels and 86% of the
average in the first 12 weeks of the year and pre-lockdown
-- Exchanges are back to 71% of 2019 levels with the last week
at 64% of 2019 and 85% of the average in the 12 weeks of the
year and pre-lockdown
-- The pipeline has remained resilient with a return to growth
in agreed sales in the last four weeks as the market returns
and a closing pipeline of GBP47 million, down 12% year-on-year
-- Demand for let properties continues, with the number of applicants
per week 3% higher than the pre-lockdown average and 88% of
2019 levels
-- The lettings register is at 93% of 2019 levels and 20% higher
than the average pre-lockdown
Financial Services
May year to date:
-- Total income was GBP24.9 million (2019: GBP33.0 million)
-- Adjusted EBITDA for the five months to May 2020 was GBP5.2 million,
in line with last year and underpinned by continued remortgage
activity and the general insurance back book
-- Adjusted EBITDA margins improved in both our branch channel and
alternative channel operations in the period prior to lockdown
-- Gross mortgage distribution at GBP7.5 billion, down 8% year-on-year
Since the easing of lockdown:
-- The Group has adapted swiftly to the new climate offering a full
telephony service whilst also maintaining strong product conversion
levels to ensure our customers have appropriate life and general
insurance with mortgage and protection consultants (MPCs) working
flexibly from home
-- Written mortgages via our MPCs were at 39% of 2019 levels and
43% of in the first 12 weeks of the year and pre-lockdown
-- For the first four full weeks of trading in England exchanged
mortgage volumes were at 60% of 2019 and 69% of the first 12
weeks of the year and pre-lockdown
B2B
May year to date:
-- Total income was GBP22.6 million (2019: GBP35.9 million)
-- Adjusted EBITDA for the five months to May 2020 was GBP1.0 million
(2019: GBP6.6 million) a decline of 85% attributable to the lockdown
which prohibited physical valuations in surveying for all lenders
and providers
-- The surveying business responded with product innovation and
retained 20% of surveyors to deliver desktop-based valuations
for lower loan to value mortgage offerings, and secured 100%
allocations from two of the largest UK lenders. The remaining
surveyors were placed on furlough
-- At the beginning of lockdown 85% of the Conveyancing teams were
furloughed due to the limited ability to progress cases
Since the easing of lockdown:
-- Surveying instructions and valuations have been building back
throughout June with the latest weekly volumes being 63% higher
than the average week in May, and reaching 83% of 2019 levels
-- Conveyancing entered the year with a strong pipeline and at the
end of March it was 27% higher year-on-year. The pipeline is
currently GBP8.8 million, 85% of the value in 2019. In response
to the re-opening of the housing market, 57% of our conveyancing
employees are now back in the business and others will rejoin
as the flow of instructions builds
-- As colleagues return to the branches, the complementary services
from sales and financial services are beginning to build back
and this remains a strong focus for us
Discontinued operations(1) - LSH
-- In December 2019, the Group agreed the sale of our non-core commercial
business, Lambert Smith Hampton (LSH). Following exchange of
contracts and shareholder approval, the buyer, Mr John Bengt
Moeller, failed to complete the transaction. The Group has terminated
the sale with Mr Moeller and is pursuing him for damages and
costs. Meanwhile, the Group is continuing discussions with another
interested purchaser that actively expressed an interest in LSH
during the delayed completion period
-- LSH income was down 13% for the five months to May 2020, with
adjusted EBITDA of GBP0.7 million (2019: GBP1.2 million)
Liquidity
As at the end of May our net bank debt was GBP55 million and our
liquidity headroom was GBP64 million, benefitting from the deferral
of VAT, PAYE and NI. The Group has a revolving credit facility of
GBP125 million committed until September 2022, with an additional
facility of GBP10 million from May 2020 and a further GBP10 million
from April 2021; both committed until October 2021. The Group
continues to explore the availability of funding to large
businesses under the Coronavirus Large Business Interruption Loan
Scheme.
Outlook
We continue to actively monitor the effect of the COVID-19
pandemic. The Board's priority remains the safety of our colleagues
and customers; to provide essential services to our customers; to
preserve and protect the future of the business; and to conserve
cash and to manage the Group through the coronavirus pandemic and
beyond.
The decisive action taken to reduce costs and to preserve cash
and manage liquidity has enabled the Group to respond with agility
through the COVID-19 pandemic to date. The housing market in
England re-opened on 13 May and is now re opening in Wales and
Scotland. Early trading indicators in England are encouraging and
we expect a similar bounce back in Wales and Scotland. However, it
is still too early to assess the long-term impact on housing
transactions and, as a result the Group is unable to provide
guidance for the full year ending 31 December 2020. The Group
remains focused on its core strategy to continue to build a
sustainable and profitable business as it navigates COVID-19.
Annual General Meeting
The Company will hold its AGM at 4.00 pm on 26 June 2020 at
Greenwood House, 1st Floor, 91-99 New London Road, Chelmsford,
Essex, United Kingdom, CM2 0PP. As previously announced, in order
to protect the Company's shareholders, employees, board members and
other relevant parties this year's AGM will be run as a closed
meeting and shareholders will not be able to attend in person. The
Company's advisors and other guests have also been asked not to
attend. Results of the voting and responses to shareholders'
questions which have been received in advance will publish on the
Company's website www.countrywide.co.uk as soon as practicable
after the AGM.
The person responsible for arranging the release of this
announcement on behalf of the Company is Gareth Williams, General
Counsel and Company Secretary.
Enquiries:
Analysts and investors
Himanshu Raja, Chief Financial investor@countrywide.co.uk
Officer
Media
Natalie Gunson press.office@countrywide.co.uk Tel:+44 (0)207 796
4133
Michael Sandler/Dan de
Belder,
Hudson Sandler Tel: +44 (0)7721 439043
Notes to Editors:
About Countrywide plc
Countrywide is the UK's largest integrated property services
group, including the largest estate agency and lettings network.
Countrywide's network of expertise combining national scale and
local reach helps more people move than any other business in the
UK and is structured around three key business units: Sales and
Lettings; B2B and Financial Services.
Forward Looking Statements
This announcement has been prepared solely to provide additional
information to the shareholders of Countrywide plc in order to meet
the requirements of the FCA's Disclosure and Transparency Rules. It
should not be relied on by any other party, or for other purposes.
Forward-looking statements have been made by the directors in good
faith, using information available up until the date on which they
approved this statement. Forward-looking statements should be
regarded with caution, because of the inherent uncertainties in
economic trends and business risks.
Notes
(1) The Group's continuing business comprises the continuing operations
under IFRS 5 of the residential sales and lettings business,
financial services and B2B businesses including surveying, conveyancing
and asset management. Lambert Smith Hampton is reported as a
discontinued business in our 2019 Annual Report
(2) Earnings before interest, tax, depreciation, amortisation, exceptional
items, employment-linked contingent consideration, share-based
payments and share of profits from joint venture, referred to
hereafter as adjusted EBITDA
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END
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