Countrywide has revealed that in 2016 it spent over £8.1m on redundancies, some £7.4m on contract costs relating to closed premises, and over £2m on redesigning marketing and associated costs linked to launching its online offering to sellers and landlords.
While much attention was given last week to Countrywide’s plummeting profits for 2016 and its rapid fund-raising to underwrite further expansion of its digital service, the full report released by the company reveals the full annual costs of restructuring.
The report states these are “exceptional, non-recurring costs” incurred during “a significant branch restructuring, accelerating our transformation agenda and resizing the Retail estate” and include:
“£8,109,000 in respect of associated redundancy costs to achieve the appropriate organisational structure;
“£15,813,000 of property provisions, comprising £4,162,000 dilapidation costs; £7,430,000 onerous contract costs in respect of closed premises; £3,084,000 associated asset write downs arising from rationalisation of our branch footprint; and £1,137,000 of other property closure costs;
“£19,564,000 of impairment charges from writing down goodwill associated with conveyancing operations (£1,083,000), and £5,016,000 and £13,465,000 respectively in relation to the Retail and London cash generating units following an assessment of the recoverable value against the carrying value of the goodwill;
“£1,358,000 of impairment charges from writing down four brands which have been abandoned as part of our review of the Retail marketplace; and
“£2,032,000 in respect of costs expensed during the year as part of the organisational redesign of our marketing function and revisions to our channels to market aligned with the launch of our digital offering.”
More restructuring costs are likely this year as the digital roll-out extends to a much greater proportion of the remaining 800 branches.
The report to the City last week promised that in 2017 “The Retail business will have a more streamlined and focused footprint delivering our multichannel offering across an increased proportion of our network. We will continue to invest in our customer journey, specifically around the initial valuation, and we will continue to leverage our technology to enhance the overall customer experience and ensure a successful sale or let.”
Elsewhere in the report the company says: “As we look to 2017, our growth agenda concentrates on transforming the mortgage buying experience for our customers - through making the process more efficient and transparent and providing consumer flexibility and choice in how they can access our services” and “During 2017 we will deliver additional functionality to support the evaluation of risk and develop a broader range of services provided directly to home buyers.”