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LSL warns over Coronavirus as takeover talks with Countrywide continue

LSL Property Services says the Coronavirus crisis has led to a softening of "lead sales indicators" - and it warns of possible “headwinds” for the business this year.

In a statement to shareholders today it says: “Whilst we have been encouraged by the residential property market conditions to date in 2020, the situation regarding the COVID-19 virus is rapidly evolving and we have in recent days, seen some slight softening of our lead sales indicators in Estate Agency. 

“We are monitoring the situation very closely as it may create headwinds for our business in 2020 if changes in consumer behaviour impact residential property market conditions. As and when any potential impact on the Group becomes clearer, we will provide updates as necessary.”


LSL is in the middle of takeover talks with Countrywide; under City rules the firms have until March 23 to make merger or takeover plans public - or to walk away from a deal.

Little mention of this is made in today’s statement except for a standard comment from LSL chairman Simon Embley that: “On 24th February 2020, the Board of LSL confirmed that it is in discussions with Countrywide regarding a possible all-share combination. Discussions between Countrywide and LSL are ongoing. At this stage, there can be no certainty that any offer will ultimately be made for Countrywide. LSL reserves the right to introduce other forms of consideration and/or vary the mix or composition of consideration of any offer. Further announcements will be made in due course as appropriate.”

Unsurprisingly, given the state of the talks with Countrywide, LSL makes much of its estate agency division’s relatively strong performance in this morning’s figures for the company in 2019.

The agency division’s underlying profit was up 30 per cent to £14.5m, “benefiting materially from the reshaping of the Your Move and Reeds Rains branch networks” - company-speak for a branch closure programme.

“It was during Q1 2019, that the Your Move and Reeds Rains Estate Agency branch network was reshaped from 308 owned branches to 144 keystone branches following the closure and merging of 81 neighbouring branches into the keystone branch network, the franchising of 39 branches and the closure of 44 branches” details the firm.  

It says residential net sales for the Your Move and Reeds Rains ‘keystone branches’ increased slightly in 2019 “and all LSL estate agency brands have seen growth in market share as measured by new instructions during 2019.” 

However, residential sales income was down by 17 per cent - the firm’s brands exchanged on 16,707 homes last year, a 27 per cent drop on the 22,747 in 2018. Lettings income was down by 12 per cent. 

The surveying and financial services divisions performed well but the LSL group overall saw a 31 per cent fall in pre-tax profits for last year, largely because of the costs of the agency closure programme.


Meanwhile one month on from the public claim that Countrywide’s sale of its commercial division was “imminent” there remains complete silence from the firm on what is happening.

The troubled agency group issued a statement to shareholders on February 7 saying the sale of Lambert Smith Hampton - originally scheduled to be completed before the end of 2019 - was the subject of an unspecified delay.

At the end of 2019 Countrywide announced the cash sale of LSH for £38m to a Monaco-based Danish property entrepreneur, John Bengt Moeller.

At the time the firm said the cash would “significantly improve Countrywide's capital structure following receipt of gross cash proceeds of £38m and allow Countrywide Group to materially reduce its net debt.” 

The company insisted the sale go through rapidly, before December 31, even holding an unusual meeting of shareholders to approve the deal between Christmas and New Year.

Then came the news of the delay on February 7; and four days later Countrywide again told Estate Agent Today that completion of the deal was “imminent.”

  • Andrew Stanton PROPTECH-PR A Consultancy for Proptech Founders

    With only 13 days for LSL to make a formal offer to Countrywide, and the present volatility of the stock market and of course Coronavirus, maybe the financially wounded dinosaur that is Countrywide may face demise due to a cold rather than any other factor. On the face of it LSL are in the driving seat but if revenue streams of all agencies get hit due to the virus, I think the timing of this matter is very much now a source of regret.

    If the 'merger/hostile bid' fails, without fresh capital there will be no cash for Countrywide to trade forward. If it were to pass - a big if - the 10,000 jobs would be under major threat and of course there is lurking a huge pension liability with a collective headcount of 14,500 or more.

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    It will be interesting to see what their annual report says in a few weeks. There has been no profit warning issued. (Andrew you must be so disappointed knowing this)

    CW have a debt of 90m at the moment , paid down from 198m in 2018. In addition they hold a credit facility revised in July 2019 of 125m.

    Andrew, I would be interested to know where you establish your facts from, after all every post I see you comment upon relating to CW is incredibly negative.

    If the merge does not complete I can anticipate there will be further office closers and Roll ups internally.

    Knowing a few staff who work for CW (Management and above) there are no concerns at the moment internally and no restrictions placed on recruitment etc.

  • Proper Estate Agent

    I'm amazed there isn't an article over Covid-19 and the amount of Agents that will get wiped out by it after suffering from tenant fee bans. The impact on the marked has been vast already.

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    Me suspects this is negotiating position from LSL and quite right as well, staff at both are saying they have nothing to worry about, cough cough, pucker up butter cups there is only one company looking to sell here and the other would only take the EA sector of the selling business if they have to...

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    Underlying profits my a..se. bascially take all the losses form the closure offcies-move the income/pipeline stock from here to the operating branches that are left and hey presto-income looks better like for like.

    31% down is all you need to know

  • Andrew Stanton PROPTECH-PR A Consultancy for Proptech Founders

    Dear Bob Owens, I think that I have been giving a balanced and accurate view of Countrywide's demise for some years.

    And these are the recent posts from October including the Daily Telegraphs article 25th Feb 2020 in which I used the now famous phrase, ''One wounded dinosaur looking to share a home ... Stanton says that Countrywide’s failure to embrace the so-called ‘proptech’ revolution has left it a “financially wounded dinosaur”.

    As a former employee of Countrywide 1985-1989 - at a point they were the number one agent - I am saddened by the lack of leadership that has been shown in recent years. In case you missed any of my factually correct observations Bob, here they are, in chronological order.

    17th October - Andrew Stanton’s thoughts - Following the recent arrival of Bruce Marsh to steady the wheel at Countrywide, whose share price dips below 4p, it was good news that Countrywide had done something new. But it was potentially bad news Bruce’s very successful career to date, appears to lack any experience in the property sector, unless home DIY can be counted and of course Dixons.

    I do hope that in the words of Britney they have not ‘done it again’ as Countrywide had previously installed a CEO the infamous and long-departed Alison Platt whose background was also anything but estate agency.

    During her four-year reign there was a 90% drop in the company’s share price. At least with the current share price at 3.9p, no-one can really harm the present fortunes of the company.
    True Bruce and Dave Lewis as a double act turned the fortune of Tesco around, following a programme of redundancies and re-modelling.

    But, the difference between Tesco and the Behemoth of Countrywide, is that Tesco when turning its fortunes around was in the top three of retailers in the world, Countrywide sadly is not in the same league as many of its competitors.

    The jury is out on whether it can survive, (as an ex-employee I hope it does) or it will have a programme of asset stripping and be consigned to history as yet another example of ‘big business’ failing to adapt to the realities of the ‘click generation’ who want service, and brands that deliver.
    Less than a week later, and Countrywide welcome on board another face from Tesco's, Amanda Rendle.

    Actually Amanda Rendle's background may well be useful, with a past including HSB, Masthaven Bank? (yes the experimental one) and currently a non-exec of The Royal Mint and Keep Britain Tidy, she may have access to copious funds - which CW desperately need, and if there is a rout, then at least she can help clean up the mess.

    It does astound me why the strategy at the top is - get someone from the outside of the industry to solve our problems and calm the stock market - Alison Platt - prime candidate - property industry knowledge zero - MD of Bupa - that was a good fit.

    Here is a suggestion - why doesn't CW put together a 'think tank' (I know very 1960's) of estate agents - and move the company forward that way. Where can they find these calibre of people with industry knowledge? - well - there are thousands of them in their business and if the look at the people they 'let go' in the past 60 months there is probably enough top talent there to make a start.

    My thoughts - share price will implode in Spring 2020, when CW looks for another lifesaving injection of cash, and then piece by piece CW will be sold off. Thoughts?

    Stanton's thoughts - 30th October - Today Countrywide is in the dock again this time it has a Royal Institution of Chartered Surveyors disciplinary meeting about 10M of diverted funds.

    At a tribunal RICS’ will state that £10,093,866 of unclaimed client funds in Countrywide’s lettings division, has been taken out of its client account, and put into its own account, and that Countrywide has grossly failed to look after/safeguard the clients’ funds.

    RICS' also says that there is a systemic, prolonged lack of professional obligations to the RICS's client money guidance, it will be interesting what defence Countrywide put forward.

    This 10M sitting within the company raises two issues; the shareholders and prospective shareholders have a false image of the shape of the company's finances, and is it time to get rid of those responsible, the chief financial officer and or his predecessor, together with anyone else, including those 'helpful' accountants who sign off the annual accounts.

    The liquidity of the company or not is certainly a factor for shareholders, though at less than 4p a share for some time I do not think many people have been buying CW shares. The equally disturbing factor is the lack of governance - and what have the financial officers of the company been doing - or not doing?

    With a multi-million pound rescue cash injection last year, a great chunk of which has been eaten through with monthly running costs of this great lumbering beast, when the 10M is subtracted from any 'cash' at the bank - will Countrywide have to 'sell the silver' to raise capital to continue trading?
    For me it is a race against time, sell off assets and cut offices, or wait and the costs of running the business will eat you and the assets and some offices will be sold or rebranded. Though I am not sure who apart from the incumbent staff in the form of a MBO, would want to buy the company as it clearly will not be making profit anytime soon.

    Countrywide - Fines, Bonfires and who shapes regulation of estate agents? October 30th 2019 – Andrew Stanton’s thoughts - Following today’s ruling by RIC's, is it time that Countrywide got rid of its rotten apples?

    Back in August 2018 Himanshu Raja - Chief financial Officer at Countrywide, was until it was voted down to receive £7M of company shares, and Paul Creffield Group GMD was to receive £8M of shares. This was at a time that the scandal of the £10M funds was known to the company, but not disclosed to the shareholders.

    Then in early Spring 2019, Countrywide were fined £215,000 for Anti Money Laundering lapses, and now they have been fined another £100,000 for financial irregularities.
    Given that Mr Creffield is himself fully supportive of RoPA, and a single regulator. Is it not time for him and Himanshu to do the honourable thing?

    Two months ago Mr Creffield when asked about RoPA said, … 'We're really supportive of regulation because we believe it will help create a level playing field with all agents expected to have the same expertise, It'll be good for the consumer too.'

    More worryingly for all parties, including perhaps Baron Best who heads up RoPA is Mr Creffield's further comments regarding RoPA, ' Because of Countrywide's scale, we've been consulted frequently (by RoPA) on proposals during their preparation, and we've conducted some pilot projects.'

    Now if the new regulatory framework that a forthcoming government may back comes into being in the form of RoPA, should some of its architects be coming from Countrywide's top management team. For me they would be the last people I would look to.

    If Paul Creffield advocates root and branch industry regulation - then Countrywide should itself be a beacon of this industry change, at present it is a bonfire of vanities, which given the proximity of November the 5th is very apt. Matches anyone.

    This article was first published on the 5th of November 2019. - Following on from the recent £100,000 fine and costs, awarded against Countrywide regarding their mismanagement of lettings funds, there is a far more alarming and arrogant strand of sentiment enshrouding the whole debacle.

    If you read all of the documentation on the case, it seems unless I have got it totally wrong, Countrywide between 2008 and 2018 had in place a policy agreed at CEO level to keep the untraceable lettings funds in the company account, all 10M of it, rather than keep it safe in a separate account, from which the funds should have been distributed elsewhere.

    Paul Creffield when alerted to it, fully co-operated with the RICS investigation, but - Paul Creffield did not become CEO, discover the deceit, and then report it as a whistle- blower.
    No it was an outside audit that picked up on the situation, which if let undetected may well have continued.

    In fact if you look closely at Paul's statement in mitigation he seems very much to make the case that because Countrywide does billions of pounds worth of mortgages a year, have a massive RICs presence, and has a huge 800 (?) strong office presence with many branches in all the towns and villages, it would be a travesty if Countrywide were too badly damaged by the affair as it would possibly upset the property industry as a whole. (TOO BIG TO FAIL).

    In other words - Countrywide had in place by its own admission a questionable practice, the internal transfer of client funds, which was company policy. Then by chance an outsider found out about it, and of course if you are the CEO of the day you are going to be as helpful as you can, but I think that to play the card of TOO BIG TO FAIL, is a dangerous one.

    Because if Countrywide is founded upon financial services and has within in very notable and trustworthy RICS personnel, shouldn't the bar be set higher rather than lower, as a warning to all.
    The panel in their judgement under mitigating and aggravating matters, actually states that Countrywide were using the fund to inflate their profit provision.

    As a matter of balance I am told by those who know that Paul is a very good at what he does, but I wonder if the matter had not come to light, would anyone at Countrywide have seized the nettle. Also where does this leave the likes of former CEO's Alison Platt (90% fall in the share price) for example, and the auditors and the Chief financial officers?

    You may not think it but I actually love Countrywide and I am a big fan, it is just a shame that all the talent was sacrificed during various regime purges, maybe they should invite some of those who can do the job back, as I feel unfortunately there are other icebergs about to present themselves in front of HMS Countrywide.

    19th February 2020 -

    There have been loud rumours that possibly due to financial constraints, Countrywide Plc and LSL are thinking of a merger. Though there is no proof of this, for several days there have been whispers especially following the harsh pruning of the LSL operation. A few days ago I did on social media entreat Countrywide to follow the strong strategy of LSL, cut out the dead wood, but a merger is another plan for sure.

    LSL has multiple brands, including Your Move under its umbrella, Reids Rains etc, and a huge financial services operation with a large e-serv RICS operation as well, so it is hard to see how two giant agencies with massive personnel could easily merge?

    Maybe it is no more than a rumour - but with the 38M deal to sell off assets stalling and the share price of Countrywide at a dangerously low point, something has to give. In contrast LSL share price has risen in the last 6-weeks from 200p a share to 343p a share - indicating something big on the horizon.

    I have tried contacting the LSL media contact Twitter account, but it was last used on the 12th of Dec 2016, so not much help. If anyone is in the know please let me know.

    The Daily Telegraph ... 25th February 2020 - 'Open to offers: One wounded dinosaur looking to share a home ... Stanton says that Countrywide’s failure to embrace the so-called ‘proptech’ revolution has left it a “financially wounded dinosaur” ... and that any merger with LSL is really a hostile takeover, with LSL setting the terms.'

    The traditional high street model is battling against declining sales and the rise of online challengers ... analyst Andrew Stanton warns: “Estate agencies of the future will be based on captured data and analytics which provide a clear narrative of what the customer likes and wants.'

  • Andrew Stanton PROPTECH-PR A Consultancy for Proptech Founders

    Oh Bob Owens - where do I get my facts? From the annual company accounts or share news in fact it takes about 4 seconds with modern tech to pull up most information. As a real estate analyst it is of course my day job.


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