Unite and GIC Extend Joint Venture
4th May 2021
Countrywide's interim H1 results has sparked a flurry of speculation about the ongoing viability of the former titan of the UK's sales and lettings industry. Shares opened down 80% this morning after the Group announced they would sell shares to new and existing investors at 10p as part of their Capital Refinancing Plan, although shares since climbed to 17p.
With financial performance hampered by challenging marketing conditions, disruptive online agent models and a balance sheet overburdened with debt, the group has updated its plans on a Capital Refinancing Plan aimed at raising £140m from investors, following a failed bond issue earlier in the year. The Board also reaffirmed its focus on a 'back to basics' strategy centred on rebuilding market share in Sales and Lettings.
The results were prepared on a going concern basis following judgement from Directors that the Group had sufficient resources to meet liabilities, despite PwC - the Group's auditors - expressing concerns of 'material uncertainty' around the future of the business. Shareholders are due to meet on 28th August to vote on the refinancing plan.
Symptomatic of the soft sales market and changing competitive landscape that has challenged Countrywide's bricks and mortar acquisition model was the group operating loss of £234m, a stark contrast to the £6.2m operating profit in H1'17.
- EBITDA down 62% to £10.7m
- House sales exchanged down 19% (-3.5% UK average)
- Properties under management down 1.5%
The woes facing Countrywide are in part shared by others in an industry coming to terms with the need to modernise. Too many agents still grapple with legacy technology that demands large back-office teams who could instead be deployed on the front line delivering customer service.
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