A trading statement this morning from beleaguered agency group Countrywide reveals that its revenue is down again - but it insists its 2018 performance showed resilience in a difficult market.
Total group income was £627m last year, down from the previous year’s £672m, which the firm takes heart from “against the backdrop of both a challenging market and the previously reported 19 per cent opening pipeline deficit in sales at the beginning of 2018."
Income in the sales and lettings sector of the business in 2018 was £329m - down from 2017’s £361m; a 16 per cent slump in sales was partly off-set by lettings income which was flat year-on-year.
In terms of the firm’s controversial Back To Basics programme, introduced last year after the removal of the company’s former chief executive Alison Platt, this morning’s trading statement talks of “significant progress.”
It says: “The build back of expertise is now largely complete with a full complement of staffing and separate sales and lettings expertise at regional and branch management level. The register of properties available for sale in UK sales and lettings was up nine per cent year on year.
“The pipeline of agreed sales awaiting exchange of contracts in UK Sales and Lettings was up five per cent having begun the year with a 21 per cent opening pipeline deficit in UK sales. Ancillary services income for each £1 of estate agency revenues for the year was 44p (2017: 38p).”
Countrywide’s full year-end figures, complete with a pledge to include more details of the firm’s turnaround programme and future proposals, will be released on March 7.
Here's this morning's trading statement in full:
Total Group income for the year was £627 million (2017: £672 million(1)), which is a resilient performance against the backdrop of both a challenging market and the previously reported 19% opening pipeline(2) deficit in Sales at the beginning of 2018.
The Group's Adjusted EBITDA(3) for the year ended 31 December 2018 was £33 million (2017: £65 million(1)), and includes £2 million of net charges, unrelated to current trading, resulting from a review of the carrying value of certain assets and liabilities.
The Group's underlying trading (excluding the £2 million of net charges) was in line with the Board's expectations at £35 million.
Significant progress on implementation of "Back to Basics", with more opportunity in 2019
The Group announced on 2 August 2018 its Strategy and Turnaround plan, at the heart of which was to build back industry expertise in Sales and Lettings to support the growth in the register of properties available for sale, to grow the pipeline of agreed sales in the UK and to improve ancillary income.
We have made significant progress in the delivery of Back to Basics in Sales and Lettings:
· The build back of expertise is now largely complete with a full complement of staffing and separate sales and lettings expertise at regional and branch management level.
· The register(4) of properties available for sale in UK Sales and Lettings was up 9% year on year.
· The pipeline of agreed sales awaiting exchange of contracts in UK Sales and Lettings was up 5% having begun the year with a 21% opening pipeline deficit in UK Sales.
· Ancillary services income for each £1 of estate agency revenues for the year was 44p (2017: 38p).
A more detailed progress report on our turnaround and the further opportunities for improvement that lie ahead will be provided with the release of our Preliminary results on Thursday 7 March 2019.
Sales and Lettings
Income in the sales and lettings business for the full year was £329 million (2017: £361 million(1)) with a strong performance in particular in lettings, which was flat year on year, offset by a 16% decline in sales, due to the lower pipeline of sales agreed as we ended 2017, and the challenging market.
Income in our B2B businesses was £213 million (2017: £221 million), with another good performance in surveying and valuations, offset by a slower market for new homes and a slower commercial transactional property market.
Financial Services income was £84 million (2017: £87 million), including another year of strong double digit income growth across the combined Buy to Let Business, Mortgage Bureau and Mortgage Intelligence channels offset by lower transactional volumes from estate agency sales.
Net debt was £70 million, with a net debt to Adjusted EBITDA ratio of 2.2x.
We are encouraged by the progress we have made in our Strategy and Turnaround plan and in the growth in the register and the pipeline in the UK. Nevertheless, we remain cautious about the market outlook for 2019 and continue to closely monitor market conditions for any potential impact arising from the wider political and economic environment. We will be in a position to provide further guidance for 2019 with the release of our Preliminary results on 7 March 2019.