TIDMCWD
RNS Number : 4590L
Countrywide PLC
30 April 2020
30 April 2020
Countrywide plc (LSE: CWD)
Countrywide plc
Countrywide provides the following update including its response
to COVID-19
Countrywide plc ("Countrywide", the "Company" or the "Group"),
today provides an update on its response to the COVID-19
pandemic.
Trading update
As noted in the update provided on 11 March 2020, the Group saw
a positive start through the end of February in agreed sales and
that continued through March, with the pipeline of agreed sales 9%
ahead year-on-year through the first 12 weeks of the year. The
pipeline through the lockdown period has remained resilient at
approximately GBP50 million and remains ahead year-on-year.
Supporting our customers and protecting our people
Countrywide provides residential lettings and sales, financial
services, surveying and conveyancing. We operate through a network
of 731 high street branches and, following UK Government advice, we
moved swiftly to close all of these branches and support our
customers whilst working from home. We have been working actively
to ensure that customers who were in the middle of renting, buying
or selling their home or arranging mortgages, general or life
insurance policies were able to safely complete. It is gratifying
that at this difficult time, we have been able to continue to
support our customers; exchanged income during the lockdown period
is running at an average of 33% per week compared with the average
for the first 12 weeks of the year. Equally, our mortgage and
protection consultants continue to be able to work remotely, with
exchanged
mortgages during lockdown running at 68% of the average for the
first 12 weeks of the year, with a mix towards remortgages rather
than new purchases.
The Group manages approximately 86,000 properties in the UK on
behalf of private and investor landlords and has a responsibility
to keep our tenant community safe and compliant with legal
standards through regulatory processes including: gas safety;
essential maintenance; urgent repairs; and emergency rehousing.
These are managed from our property management centres which remain
operational, for this essential business only, supporting 100,000+
tenants who are reliant on us to manage their housing emergencies.
The Group continues to facilitate lettings renewals through these
centres and new lettings through remote working. Total renewals and
new lettings together are running at 48% per week compared with the
average for the first 12 weeks of the year.
To preserve and protect our business for the future
We have taken swift and decisive measures to reduce operating
costs and capital expenditure. The actions taken include:
-- Costs of the Board and leadership team: The Chairman and
non-executive directors volunteered to take a 33% reduction in
salary, with effect from 1 March 2020, and the Group's executive
team and leadership team agreed to take a 20% reduction in salary
from 1 April 2020. These reductions will be for the duration of the
period during which the Group is participating in the Coronavirus
Job Retention Scheme;
-- Costs of our people : the Group has 78% of its people on
furlough under the Government's Coronavirus Job Retention Scheme.
All non-furloughed staff earning above GBP45,000 also took a 20%
reduction in salary ;
-- Discretionary spend: materially reducing our discretionary
spend, including our marketing spend, to reflect the current
environment;
-- Capital expenditure: curtailing all capital expenditure,
including suspension of transformation of our IT estate;
-- Tax deferral: using the Time to Pay provisions that allow the
deferral of VAT, PAYE and NI, the Group agreed the deferral of
taxes due for March 2020 to June 2020 to the end of the tax
year;
-- Business rates: benefitting from the business rates 100%
retail discount scheme, extended for estate and lettings agents for
2020;
-- Working capital: in line with many others in the property
services industry, we are moving mostly to monthly rent payments,
and carefully balancing our payment obligations between smaller and
larger suppliers to manage the working capital cycle. The majority
of our landlords have been supportive of the change to monthly
payments.
Financial position and liquidity
The Group meets its working capital and funding requirements
through a Revolving Credit Facility of
GBP125 million which matures in September 2022. The Group
benefits from a supportive lender group of six lenders ("Lenders")
most of whom have provided borrowing facilities since March 2013.
In April 2020, the Lenders agreed to provide an additional GBP20
million facility for an 18 month period, with GBP10 million
available from 1 May 2020 and GBP10 million available from April
2021. In view of the uncertainty arising as a result of COVID-19,
the Lenders also agreed to waive the Group's debt covenants for the
March 2020 covenant tests and to amend the covenants going forward
in the short-term to be based on liquidity.
As at 29 April 2020, the Group has available cash resources of
approximately GBP30 million and from 1 May 2020, the available
liquidity will be GBP40 million.
The Group has run a series of stress tests and, whilst it is
impossible to assess the impact of COVID -19 on the UK housing
market, the method we have used to stress test the liquidity of the
Group is to factor in known revenue and cash streams that continue
to flow during COVID-19, aligned with the mitigating actions on
cost and cash flow referred to above.
On the income side, we modelled a 73% reduction in income in Q2,
before overlaying: the benefit of the existing pipeline in March
2020 of agreed estate agency sales; written mortgages; the active
conveyancing pipeline; conservative assumptions on the collections
of March receivables in Lambert Smith Hampton; the benefits of
recurring income and cash flow from the lettings business of
managed properties and the continuing benefits we are seeing from
the delivery of desktop based valuations in our surveying
business.
On the cost side, we have factored in a reduced run rate of
costs and cash flows actions for the duration of the lockdown
period. For the remainder of the financial year to 31 December
2020, we have looked at a number of scenarios to assess how quickly
the market might return and how quickly the closing March pipeline
completes and converts to cash flow, as well as scenarios for the
phasing of our return and therefore the associated costs to match
the customer demand.
In the event of a prolonged lockdown beyond three months, or a
slower recovery, the reasonable worst case scenario also assumes
the ability to further defer tax liabilities due for the period
July to September 2020 into the calendar year 2021.
After meeting existing creditor payments of approximately GBP10
million, the results of our stress testing show that the Group
still has a sustainable liquidity of around GBP20-GBP30 million to
support the business through our reasonable worst case
scenario.
In order to provide additional liquidity, the Group has begun to
explore the availability of funding available to large businesses
under the Coronavirus Large Business Interruption Loan Scheme.
We anticipate that with the continued lockdown there will be a
material slowdown in housing transactions. Given this situation,
until further certainty is gained, we are unable to provide further
guidance on future profitability at this stage.
The Board believes these measures are appropriate and
proportionate given the current challenges the business is facing,
and will enable the Group to shoulder this downturn in the near
term and to return the Group back to profitable growth. The Board
would like to take this opportunity to thank all our colleagues in
Countrywide for their ongoing dedication and commitment to ensuring
the continuation of the essential services the Group provides to
its customers.
The Group expects to report its final results for the year ended
31 December 2019 by 29 May with the AGM to be held thereafter.
This announcement contains inside information for the purposes
of Regulation 596/2014/EU. The person responsible for arranging the
release of this announcement on behalf of the Company is Gareth
Williams, General Counsel and Company Secretary.
Enquiries:
Analysts and investors
Himanshu Raja, Chief Financial Officer investor@countrywide.co.uk
Media
Natalie Gunson press.office@countrywide.co.uk Tel: +44 (0)7721
439043
Michael Sandler/Dan de Belder, Hudson Sandler Tel:+44 (0)207 796
4133
Notes to Editors:
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 three key business units: Sales and
Lettings; B2B and Financial Services.
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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