15th Dec 2005 07:00
Trading Statement Countrywide is due to release its preliminary results on the 14th March 2006,and is providing this update in advance of the close period.Estate AgencyThe volume of completed home sales in 2005 is likely to be at the lowest levelfor 30 years. However, we are pleased to report that the gradual improvement intrading conditions that we have experienced since the very low points in thewinter/early spring of 2004/2005 has continued. Although, in our experience,house prices have remained reasonably stable throughout the year, the volumesof newly arranged sales have improved and, most unusually, the fee value ofsales arranged in November exceeds that experienced in October. As aconsequence, the pipeline of fees attached to sales in the hands ofconveyancers awaiting exchange of contract, now exceeds ‚£76.8m (on the30.11.05) a figure some ‚£16.7m higher than 12 months ago when, immediatelyfollowing our acquisition of an agency/surveyors business from the Bradford &Bingley plc, we had 54 more sales offices.In the same period, commission rates across the enlarged business haveincreased from 1.58% to 1.69% despite intense ongoing downward pressure on feesacross the whole Country - a performance about which our management team isjustifiably proud.Financial ServicesAlthough adversely affected by a variety of factors in the early part of theyear, most particularly, substantially fewer selling opportunities, high staffturnover and price resistance to our life protection products - we have seen amarked improvement during the second half of the year and during the fourthquarter were able to integrate into our selling compliance framework themajority of the consultants working in the former B&B agency offices.Whilst productivity shortfalls between the respective sales forces continues toexist, we are confident of being able to close the gap in 2006. Lower pricingof the life products introduced in the third quarter of 2005 has also seen asubstantial uplift in sales and retention in the intervening period.SurveyorsTrading conditions have been challenging throughout the year for a number ofreasons. The B&B agency/surveying acquisition has lead to over capacity in oursurveying division this year, depressing the near term profitability of thebusiness, but it positions us well for the introduction of HIPS in 2007.Reduction in the overall volume of re-mortgage business - and the market sharecontraction at our most valuable supplier of survey work have impacted trading.ConveyancingThe problems to this division caused by the failure of a new computer systemhave been fully reported earlier. The initial stages of the replacement systemhave been successfully completed and tested.HIPS & SIPPSFollowing the formal confirmation of the introduction of HIPS on the 1st July2007, we are now able to further develop our implementation and investmentplans to meet the needs of this changing market.Along with others, we were disappointed to note the Chancellor's recentdecision to remove residential property from Self Administered Pension Plans in2006. However, whilst our lettings business will not be able to benefit fromthis opportunity, the effects on the Group's result is not material.Conclusion2005 has been, for the most part, a very challenging year for Countrywide. Formuch of the year we have suffered from below long run average transactionvolumes. At the same time, we have been integrating the largely underperformingagency/financial services and surveyors business acquired in 2004 into our corebusiness. However, we believe that we have made enormously successful steps tomerge the two businesses and are gratified to have seen a tick up in marketactivity as the year has progressed.With two months' results outstanding, we are currently comfortable that theGroup's year-end performance will be in line with current consensus.Since August 2005, ‚£6.3m has been used to buy back shares in the market and ‚£1.7m to pay a 1p interim dividend. In the future, the Board intends to use bothmethods as appropriate to provide returns to shareholders.Given a reasonably benign interest rate environment, and no major adverseexternal factors, we seem certain to enter the New Year with a strong pipelineof ongoing business, very little debt and guarded optimism for the future.ENDCOUNTRYWIDE PLCRelated Shares:
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