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Countrywide has it all to do

Sales volume remains under pressure
March 7, 2019

Countrywide (CWD) performed much as expected in the year to December 2018, with a continued decline in transactional volume, as economic and political uncertainty left both housebuyers and sellers sitting on their hands. Profits before exceptional items fell from £26.1m to £5.4m, but this was before taking into account impairment and other charges of £238.9m.

IC TIP: Sell at 8.98p

Adjusted cash profits from sales and letting collapsed by 96 per cent to £1.19m, with house sales exchanged down 14 per cent at 46,828. Lettings provided a more resilient performance, with properties under management down 3 per cent and lettings income just 1 per cent lower. However, a ban on tenant fees will cost £9m, while the slowdown in property transactions will trim 2019 first-half profits by £3m-£5m.

Countrywide estimates that cash profits for 2019 will be roughly the same as in 2018, but this is dependent on what is usually a stronger second-half performance – given the current climate, that can’t be relied on. On the financial side, the balance benefited from a capital-raising in August of £125m, which means that net debt fell from £212m in June 2018 to £71m.

Analysts at Peel Hunt downgraded their forecast for cash profits to £30m from £43m for the year to December 2019, compared with £35m in 2018.

COUNTRYWIDE (CWD)  
ORD PRICE:8.98pMARKET VALUE:£147m
TOUCH:8.84-9p12-MONTH HIGH:67pLOW: 8
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:13.4p*NET DEBT32%
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201470279.630.815**
201571947.718.915
201672419.58.05
2017662-211-89.3nil
2018619-253-30.8nil
% change-7---
Ex-div:-   
Payment:-   
*Includes intangible assets of £308m, or 18.8p a share **Excludes special dividend of 9p a share