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By Graham Norwood

Editor, EAT and LAT

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OTHER FEATURES

Countrywide, two years after Platt - time for the last rites?

In six years of editing Estate Agent Today, some of my most dramatic moments have been covering the troubles - some would say the car crash - of the Countrywide empire.

No moment was more dramatic than precisely two years ago when Alison Platt was ousted from the role of chief executive on January 24 2018, less than 18 months after being bought in from private care firm BUPA to return an ailing estate agency to good health.

Little did people know that by the time she was shown the door, the company had moved into intensive care - and since then has been almost continuously on life-support.

Platt’s time in office, if people need reminding, was torrid.

Six months after her arrival, the managing director of estate agency and the group commercial director stood down at short notice. Something was clearly up at Countrywide and within weeks many other experienced hands departed - some pushed, others jumping.

In came many executives with little or no agency background to fill jobs with titles of little or no meaning. The ‘Managing Director, Retail’ for example joined from Dixons Carphone and led an ill-fated online experiment; meanwhile a marketing head was bought in from the BBC and a HR chief from BUPA. Agency experience? Who cares?

The seasoned agency hands that remained were given spectacular objectives; for example, a respected sales director was charged with “leading the transformational change agenda as part of the Building Our Future Programme.” Good luck with that.

A series of disastrous performance figures quickly followed: income and market share dropped, indicating a far worse picture for Countrywide than for most other agencies, even in challenging times characterised by Brexit uncertainty and London market stagnation.

Yet the most obvious statistical record of Platt’s failure at the post was Countrywide’s share price. Before her arrival it had hit a phenomenal high of 686.00p; a series of falls meant that by late 2016 the listing was dropped from the FTSE 250 and had fallen below 170.00p. As Platt walked out of Countrywide for the final time, it hovered around 100.00p.

But here’s the thing - and I imagine you’re ahead of me now: is Countrywide actually any better without Platt than it was with?

Let’s get the share price embarrassment out of the way first. Before a consolidation process just before New Year, which had the aim of disguising Countrywide’s performance, the share price was little more than 5p on some days.

In the league table of estate agency groups, compiled on the basis of the number of properties listed for sale, the Countrywide brands (as of mid-December 2019) were in second place, over 2,000 properties behind Connells: remember that in Platt’s time, Countrywide retained first place.

In 2016, Countrywide’s total revenue - including lettings and non-agency activity such as financial services - was £737m. This dropped, under Platt, to £672m a year later. By 2018, post-Platt, this was £627m.

In 2018, again post-Platt, there was also a spectacularly ham-fisted attempt to get through a Fat Cats bonus package that would have handed executive chairman Peter Long, managing director Paul Creffield and chief financial officer Himanshu Raja shares valued respectively at £6m, £8m and £7m - just as investors were being tapped up for £140m. A shareholder rebellion scuppered the bonus deal.

In the past two years there have been a series of issues and management negotiations to extend credit arrangements, restructure debt and, most recently, sell-off of commercial arm Lambert Smith Hampton - a disposal which the current Countrywide management pledged would not happen when they succeeded Platt.

The balance sheet is not entirely negative of course.

The fact that Countrywide survived the Platt trauma at all is arguably an achievement of sorts. That it has suffered only one shareholder rebellion while its management has seen long-term decline of the firm’s influence, market share and reputation is a surprise. And not selling Hamptons International or John D Wood (so far, at least) has defied many analysts.

But is survival what counts as achievement at Countrywide?

Perhaps one day it will all come good again: decline of the kind seen during the Platt period cannot be reversed overnight. But like governments that blame their predecessors for failings, there comes a time when current management has to take responsibility - espe-cially as many of the current top table were in positions of influence during the Platt era.

And as for Alison herself?

Little has been heard since her departure from estate agency but she picked up £674,450 from Countrywide - that was her normal remuneration of actual and in lieu salary, pension entitlement and car allowance.

She also remains a non-executive director at Tesco for which she received, in 2018-19, a more modest £82,500 - well, every little helps.

One hopes that she is in good health: Countrywide, however, still looks distinctly weak. Will 2020 see it come back to fitness…or receive the last rites?

*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting about all things property at @PropertyJourn.

  • Chris Arnold

    To paraphrase the sensationalism of Russell Quirk, Countrywide aren't lazy estate agents - they're scared. Scared to devolve responsibility down to branch level. Scared to reveal the people behind those brands. Scared to reveal what they value most and what they believe. Scared to encourage forward-thinking among its customer-facing staff.
    Instead, they work to minimise any variation, including the good stuff.
    Don't get me wrong. I'm a huge fan of those brands and wish them nothing but success, but the market will squeeze the undifferentiated. Until CW figure out what makes them different, further decline is inevitable.

  • Michael Day

    I am staggered that shareholders haven't moved to oust the senior team - Peter Long's track record at Countrywide (and elsewhere) would mean that his cv wouldn't make the cut at most operations.

    They tried to "innovate" but, foreseeably, ended up "cannibalising" their own business and have shown no other willingness to innovate.

    Back to basics always sounded a bit weak and the lack of vision and shared understanding across the business of what this (or indeed any objectives they have) means is an issue.

    A bit like the football team that is "too good" to get relegated, there seems to be a misguided view that it will come right. It won't without change. Ironically, the market is likely to improve in 2020 and that is likely to accelerate Countrywide's decline as they are servicing debt and do not have enough resource to invest and take advantage of an upturn and are likely to miss out to more agile, faster and focused operations.

  • Andrew Stanton Estate Agency Insights Strategies

    A little history, two of the most highest paid executives back in back in August 2018 -Himanshu Raja - Chief financial Officer at Countrywide, was until it was voted down to receive £7M of company shares, and his colleague Paul Creffield Group GMD was to receive £8M of shares. This was at a time that the scandal of the £10M Lettings 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?

    Some 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 Countrwide should itself be a beacon of this industry change, at present it is a bonfire of vanities.

    Following on from the recent fine and costs, awarded against Countrywide regarding their mis-management 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 then keep it safe in a separate account, from which the funds should have been distributed elsewhere.

    Paul Creffield fully co-operated with the RICS investigation, but - when Paul Creffield originally discovered the deceit, he hid the fact. And it was a whistle- blower, via an external 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 to the RICS tribunal. He seems very much to make the case that because Countrywide does billions of pounds worth of mortgages a year, has 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 your 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? Were they looking the other way?

    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 that extremely soon the final iceberg is about to present itself in front of HMS Countrywide.

    And the recent concept of selling off part of the company just before the new year (asset stripping) to raise money to fund a revolving line of credit, that just sinks the company into deeper debt as it haemorrhages yet more money, is a very bad strategy, it keeps the lights on - but who cares - those in the C-suite are unable to use that light to see what is obvious - immediate change at the top.

  • Rob Brady

    The concern, as shown in other industries, is that when the big players start to crumble and dissolve it affects everyone else...

    Blockbusters - End of all video/dvd stores
    Woolsworths - End of all smalldiscount stores
    Ourprice - End of all small record stores
    Dixon’s - End of all small electronic stores
    Kodak - End of all small film processing shops
    Toys R Us - End of all small toy stores

    Imagine the news ‘One of the largest estate agencies in the UK goes into administration’. What would the consumer think then about the role estate agents play’

    Andrew Stanton Estate Agency Insights Strategies

    Well Rob, the headline might actually read Countrywide - End of volume sales of Betamax players.

    The point being for our younger readers (who may not know what a Betamax player is) that if Countrywide fails, it is not because corporate agency is done - look at Sequence/Connells that Shipton Building Society business returns profit year after year.

    Why? Because it adapts, it moved on from Video vs Betamax - and continually engages with the new challenges of engaging with and selling to its customers. The vendors and landlords, buyers and tenants.

    As one on the very edge of innovation and tech Rob, you of all people realise that artificial intelligence and automation, are pushing into all of commerce and service industries, not just agency.

    Unfortunately, if the people running a business as large as Countrywide are on the wrong side of 65, they probably feel at home with Betamax but think Python is a late 1960's TV programme, instead of an interpreted top-flight, general-purpose programming language, used in the proptech and other tech communities.

     
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