Countrywide says its Back To Basics strategy has seen a nine per cent increase in properties for sale with the group since the start of the year.
The company's full statement on trading for the first half of this year comes at the end of July but this morning's interim statement says:
The Group is encouraged by early operational improvements since it set out its immediate priorities for a return to profitable growth at its preliminary results in March 2018.
At that time, the Group announced a strategic re-set which, alongside management changes, established the foundations for the Group to return to profitable growth focused on:
· Back to basics approach in Sales and Lettings to regain market share;
· Cost efficiency; and
· Financial discipline and better cash flow conversion.
The Group has made substantial progress in re-establishing industry expertise and the right level of staffing and capability in its Sales and Lettings businesses. The register of properties available for sale is now broadly back to 2017 levels having increased by 9% since 31 December 2017.
Cross-referral income within the Group has increased by 8%, with every £1 of income earned by estate agency in the first five months to May 2018 matched by a further 41 pence of income generated from estate agency referrals (FY 2017: 38 pence in every £1).
On cost efficiency, we have reduced head office functions by a third. Our B2B and Financial Services businesses performed in line with the Board's expectations.
Long Term Strategy - The Company is now looking to put in place a long term capital structure to reduce its indebtedness and to support its turnaround plan and growth. It is our intention to reduce the levels of debt by at least 50% through additional equity finance. Our major shareholder, Oaktree, and the Company's lender group are supportive of this approach. This process remains at an early stage and the Group will update the market on these initiatives at its interim results on 26 July 2018.
2018 trading and outlook - The market in the first half has continued to be subdued and we have experienced longer transaction cycles. As previously announced, the Group entered 2018 with our Sales pipeline significantly below that of 2017. Following a recently completed review, adjusted EBITDA is now expected to be around £20 million lower in the first half compared with the same period last year and we do not expect this shortfall to be recovered in the second half. Our focus remains on building back the Sales pipeline and we expect to substantially close the pipeline gap by the end of the year. We will provide full year guidance and a detailed recovery plan at the interim results on 26 July 2018.