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Agencies & People

D-Day for Countrywide approaches as full-year results date is set

Company says it will reveal the full details of its 2018 performance on 7th March after which directors will be quizzed during a live video conference.

Nigel Lewis

Countrywide is to reveal its much-anticipated final results for 2018 on Thursday 7th March, it has been announced.

Senior directors including Group CFO Himanshu Raja and Group Chairman Peter Long are due to attend a live video conference at investment bank Jefferies in the City to present the troubled company’s results for the 12 months to December 31st 2018.

Much is riding on the senior leadership team proving to investors that their  ‘back to basics’ strategy is delivering the results that investors are hoping for, including reversing recent reductions in sales volumes, and increasing income from lettings.

Spearheaded by Group Managing Director Paul Creffield (left), the company has been hiring dozens of senior staff, branch managers and sales people with more traditional property industry backgrounds.

It has also been attempting to lure back talent chased out during the ‘retail’ era ushered in by former CEO Alison Platt, although not always successfully. In September last year a senior lettings director, Tim Van der Schyff, jumped ship to Nick Dunning Associates.

Earlier this month the company released a brief interim statement for 2018 revealing that it had delivered a ‘resilient’ performance, although overall revenue was reported to be down by 10% and half that of 2017.

The public presentation and Q&A session with investors on 7th March will put some much needed flesh on the bones of its performance, reveal a more detailed picture of its 2018 performance and affirm what Long and the other directors intend to do this year. Its 10,000 employees will be watching with interest.

February 28, 2019

2 comments

  1. I am not about to become paranoid, but following on from my earlier piece this morning about Countrywide’s woeful balance sheet, the National Trading Standards Estate Agency Team, has confirmed that in its opinion – to be tested by case law – that failure to tell prospective clients about referral arrangements could make all estate agents (including Countrywide) face criminal charges.

    Pandora’s box is at last open, in the name of transparency, those very helpful folk at the NTSEAT feel that if estate agents for instance fail to tell a prospective vendor that the solicitor they are recommending, gives that agent a fee as a referral, then the agent could be open to a criminal court action under the CPRs and probably action by NTSEAT who could close them down.

    The new NTSEAT (14 page) guidelines are that estate agents must be transparent and plainly communicate to a prospective client: –

    ‘(a) The price of its services, including any “compulsory” extras; and
    (b) Where a referral arrangement exists, that it exists, and with whom; and
    (c) Where a transaction-specific referral fee is to be paid, its amount; and
    (d) Where a referral retainer exists, an estimate of the annual value of that retainer to the estate agent or its value per transaction.’

    This sounds on the face of it a really good idea, let the consumer know all.

    But, if you are a huge corporate like Countrywide, Connells, etc, and you do refer your solicitor business to a certain solicitor, how will it sound if the agent has to say, ‘Mr vendor we feel you may want to use XYZ solicitors, you do not have to, but be aware we get a £120 referral if you do, and annually (and this is the kicker) we as a company receive 2M a year from that solicitor for recommending them.’

    Do you think the agent will get many takers?

    It is not just solicitors referrals, that the NTSEAT are talking about, it will cover everything where a referral exists, EPC’s, surveys, you name, the agent will need to declare a monetary interest and an annual sum that they receive.

    In Countrywide’s case I am informed that for every £1 of revenue generated by the sale fee, an extra 40p of revenue comes from other income streams, solicitors, mortgages etc. So, I assume that referral fees are at play in this 40p of revenue.

    What I find most fascinating in the NTSEAT guidance notes is the sentence …

    ‘Plainly the most important information in deciding whether to accept a service is the price of that service’

    So trading standards want to protect the consumer, as the starting position for all consumers is knowing the price of the service?

    My thoughts are, consumers would actually like to know the quality of the service, relative to the cost. And what I mean is this.

    An agent gets £120 for referring a client to a solicitor, and the company earns 2M a year in referral fees. So, that could look to be a questionable practice.

    Much better that the client uses some other solicitor, and the agent earns no fee and there is tie up between the agent, the conveyancing of the sale, and the vendor.

    Is that a better system though? A vendor uses a solicitor who is unknown, they may be great they may be not too good, they may speak to the agent as the sale progresses, they may not.

    Or, an estate agent recommends a company that it has a massive connection with, yes it receives a referral fee, but due to the huge volume of business, there is also a commercial incentive to get Mr or Mrs Vendor exchanged.

    Not only this, – there are highly developed software and hardwired processes in place, and management teams both within the estate agency and the solicitors, all with a common aim of getting as many properties exchanged.

    This interdependence I think is not a bad thing; having had solicitors and conveyancers over the years who never return a call or seem to do anything at a pace (not all) I would rather place my clients sales in the hands of a fully focused large solicitor practice who has the staff and the technology to perform.

    Luckily, those days are behind me, but my fear is that in the pursuit of transparency, agents might find they are ‘pushing’ clients away from using their preferred solutions – a brilliant solicitor solution, a brilliant survey solution – and ‘pushing’ clients out into the unknown.

    I could be wrong, but if clients no longer take up the recommended suppliers of other related services, because of the money that the estate agent gets as a referral fee, then this lost revenue stream could see many agents struggling.

    Lastly, referral fees exist in many, many areas of commerce, so will trading standards be searching these out and making the world transparent for all folk, including the beleaguered estate agent?

  2. My humble opinion is that with profits being less than 6%, it is time for CW to close about a third of the offices. But, Countrywide have left it far too late and there is no recovery plan that will see it survive.

    I am biased favourably towards this company as 30 years ago they had the foresight to make me a manager after 15 months of becoming an estate agent. But that was in 1988, and since then I am not too sure that they have made any key moves forward.

    They sought to be the largest agent, when they should have sought to be the most profitable, my best advice, get all the top tier of the management team, put them in a minibus … or two large coaches … and visit all of the CW branches.

    Then they would see that running a business as though the UK is still in 1988, is not a winning formula.

    Many know I am not convinced that Purplebricks who has never made a profit, or paid a dividend is the correct business model either, but Countrywide at 10p a share and Purplebricks at fourteen times that 140p a share, should be telling those running Countrywide that the game is over.

    With completions in 2019 in residential sales likely to be down by 8%, that will cut into the 6% profit margin of this failing business.

    Add in the scrutiny that is coming into the industry from the government regarding referral fees for solicitors and financial services, surveys etc, plus maybe a 9M loss of revenue when the Letting ban bites in 3-months, and within a year a 10% or more loss is likely to hit Countrywide.

    If Countrywide fails, and I do not see anyway out for them, the future will belong to the other 17,000 plus estate agents to move forward, and probably this is the core problem.

    Since 1988, the amount of property to be sold has increased in real terms by only 187%, but the amount of agents has increased by 650%, in fact there is an estate agent on average every 2.5 miles, based on a survey I did in 2018 looking at a 20 mile radius of a county town.

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