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Countrywide battens down the hatches

Out goes the final dividend; in comes £37m via a share placing
March 10, 2017

Countrywide (CWD) enjoyed a busy first quarter in 2016, but trading conditions after that were significantly tougher as a result of higher stamp duty and uncertainty generated by the referendum. Proposals to ban letting fees merely added to the gloom.

IC TIP: Sell at 181p

Measures to steady the ship included omission of the final dividend and a share placing equivalent to 9.99 per cent of the share capital at 175p a share, raising £37.8m before expenses. Other measures proposed include a significant reduction in the cost base, updating the technology platform and focusing on generating organic growth. However, restructuring costs and impairment charges swallowed up £47.3m. This year will be challenging because there will be no repeat of the frantic activity seen in the first quarter of 2016 as investors rushed to buy property before the introduction of higher stamp duty charges.

Measures introduced since the EU referendum have already resulted in annualised cost savings of £10m, with a further £9m expected in the new financial year. Branch closures in 2016 totalled 200. As part of the overall package available to customers, sellers can now list, monitor and complete the full property transaction online for a fixed fee, while retaining the option to upgrade to a fully supported service.

Analysts at Peel Hunt are forecasting adjusted pre-tax profits for the year to December 2017 of £51m and EPS of 18.7p (down from £53m and 19.3p in 2016).

COUNTRYWIDE (CWD)
ORD PRICE:181pMARKET VALUE:£392m
TOUCH:180.75-181.75p12-MONTH HIGH:393pLOW: 163p
DIVIDEND YIELD:2.8%PE RATIO:23
NET ASSET VALUE:222p*NET DEBT:52%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2012**525-11.0-2.2na
201358538.116.58
201470279.630.815***
201571947.718.915
201672419.58.05
% change+1-59-58-67

Ex-div:-

Payment:-

*Includes intangible assets of £722m or 334p a share **Pre-IPO figures ***Excludes special dividend of 9p a share