TIDMCWD
RNS Number : 9974P
Countrywide PLC
24 November 2016
24th November 2016
Countrywide plc Trading Update
Good strategic progress in a challenging market
Countrywide plc ("Countrywide" or the "Group") (LSE:CWD), the
UK's largest integrated property services group, issues its trading
update for the quarter ended 30 September 2016.
Markets
As expected when we reported our Interim results, transactional
activity in the residential property market has remained
challenged. A combination of changes in stamp duty and the EU
referendum in June means transaction levels are currently running
significantly below 2015. Bank of England mortgage approvals in Q3
2016 were 12% below last year. We now expect transaction volumes
for 2016 to be 6% down on 2015 and while too early to say
definitively, it is likely that the level of market transactions in
2017 will be lower than 2016.
The lettings market was affected by the rush to beat the changes
in stamp duty at the end of Q1, resulting in a larger than usual
supply of rental properties. Stock has increased more than tenant
numbers, meaning more choice for tenants slowing rental growth,
with rents falling in some areas. Overall though tenant numbers
have increased slightly compared to last year and we expect the
slowdown in the sales market to support the growth in the size of
the rental market in the medium term.
Key Performance Indicators
Total group revenue for the quarter was GBP188.5m (2015:
GBP197.1m) with revenue for the nine months ended 30 September 2016
totalling GBP558.7m (2015: GBP535.7m).
KPI's in Q3 were as follows:
Q3 V Q3 Sep V Sep
YTD
2016 2015 2016 2015
----------------------------------------------------------- ------- ------ ------- ------
* House exchanges (Retail) 13,409 -1% 39,207 +7%
----------------------------------------------------------- ------- ------ ------- ------
* House exchanges (London) 2,484 -29% 7,960 -11%
----------------------------------------------------------- ------- ------ ------- ------
* Residential lettings properties under management
(Retail) 68,601 +14% 68,554 +15%
----------------------------------------------------------- ------- ------ ------- ------
* Residential lettings properties under management
(London) 22,069 +1% 22,060 +4%
----------------------------------------------------------- ------- ------ ------- ------
* Number of mortgages arranged (Financial Services) 24,011 +19% 68,367 +30%
----------------------------------------------------------- ------- ------ ------- ------
The slowdown in activity across the market in Q3 is clearly
evident in the closing pipe-lines for our Retail and London
businesses, which at the end of September were down 16% and 26%
respectively compared to a year earlier.
Strategy Update
In a challenging and fast changing market it is more important
than ever that we move at pace in delivering our strategic
initiatives. We continue to demonstrate good progress on these as
outlined below.
-- Digital Pilot
We are delighted with the results of our digital pilot. Compared
to the relevant control group, the pilot branches have recorded
consistent outperformance in the period since launch to date across
key measures:
Pilot
v.
Control
Group
-----------
* number of leads +4%
* instructions +15%
+8%
* registered buyers No change
* Average fee achieved (%)
* Online as a % of all instructions 3-4%
What we have learned over the past few months has informed the
development of the proposition going forward. The combination of
our people, our high street presence and online technology is
clearly differentiating. It is evident that our full service
customers value the enhanced online tools that this proposition
brings. We are now rolling out our digital proposition to the next
wave of brands and branches as planned.
-- Lettings Progress
We have successfully grown the number of properties under
management by 11% over the past 12 months to 90,614 (2015: 82,013).
Landlord retention has been a key initiative and the progress is
evident with the run-rate for 2016 showing a 6% improvement on
2015. We also successfully launched the 'Fixflo' tenant app
(www.fixflo.com) to our Lettings customers in August 2016. Feedback
has been positive from both Landlords and Tenants who find it easy
to report issues and appreciate the significantly improved
communication and control.
-- Remortgaging Activity
As well as further strengthening our position as the UK's
largest single mortgage broker, we have been focused on improving
our retention rate on existing customers whose fixed term deal has
come to an end. So far in 2016, we have successfully completed a
re-mortgage for 19% of our customers compared to 13% in 2015. We
expect to finish the year having helped 25% of our existing
customers to find new deals and we remain committed to our
long-term target of 33%.
Outlook
We anticipate that the reduced level of market transactions we
have seen in the second half of this year will lead to our 2016
EBITDA being around the lower end of market expectations. This
challenging environment underlines the importance of our focus on
efficiency and productivity and the shift to our multi-channel
model which we expect to yield significant benefit to our
performance.
Commenting on the Group's performance, Alison Platt, CEO
said:
"We have made good progress this year despite tough market
conditions since the EU referendum, particularly pleasing is our
growth in market share in both Sales and Lettings based on
available market data up to July. In addition, these results in our
Lettings, Mortgage and Professional Service businesses underline
the importance of the breadth of the group and the focus we have
placed on keeping the customers we win and continuing to serve
them. In light of the chancellor's announcement yesterday regarding
letting agents' fees, we look forward to working with the
Government through this consultation process. The results of our
digital sales pilot and the roll out of Fixflo in Lettings signal
strong steps towards building our multi-channel network across the
UK. Our work to ensure we have fewer, better brands and branches
continues at pace."
-Ends-
Contacts:
Media Investors
Caroline Somers, Head of Jim Clarke, Group Chief
External Communications Financial Officer
+44(0)7515919588 +44(0)7970 477299
About Countrywide plc
Countrywide is the UK's largest integrated property services
Group, including the largest estate agency and lettings network.
Countrywide's network of expertise combining national scale and
local reach helps more people move than any other business in the
UK and is structured around four key business units: Retail,
London, B2B and Financial Services. We are proud of our strong
position:
-- GBP19 billion worth of property sold in 2015 - More homes in the UK than anyone else
-- GBP12.1 billion of mortgages completed - Largest single mortgage broker in the UK
-- 74,500 properties under management - Largest player in a fragmented market
Countrywide plc's award-winning service has earned the business
over 231 high-profile industry awards since 2008 with customers
voting Countrywide Best National Agency Group at the 2015 ESTAS
awards.
1. Forward Looking Statements
This announcement has been prepared solely to provide additional
information to the shareholders of Countrywide plc in order to meet
the requirements of the FCA's Disclosure and Transparency Rules. It
should not be relied on by any other party, or for other purposes.
Forward-looking statements have been made by the directors in good
faith, using information available up until the date on which they
approved this statement. Forward-looking statements should be
regarded with caution, because of the inherent uncertainties in
economic trends and business risks.
2. Next Results Announcement
The next trading update is expected to be the 2016 full year
results, to be issued in February 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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