News Column

Countrywide Profit Surges, Pledges Big Rise In Dividends

July 31, 2014

Steve McGrath



LONDON (Alliance News) - Estate agency and property services company Countyrwide PLC Thursday saw its shares rise strongly after promising bigger payouts to its shareholders, and as the recovery in the UK housing market fueled a three-fold jump in pretax profit before exceptional items in the first half of the year.


The company reported a pretax, pre-items profit of GBP37.1 million for the six months to June 30, up from GBP12.3 million a year earlier, as revenue jumped to GBP334.5 million, from GBP258.8 million, and margins increased as cost efficiencies offset higher staff costs.


It swung to a pretax profit of GBP33.3 million, compared with a loss of GBP10.1 million in the first half of 2013, as it also booked a GBP14.6 million profit on the disposal of most of its stake in property website Zoopla Property Group PLC when that company did an initial public offering last month.


Income was up 17% from its estate agency business, 20% from lettings and 13% from financial services. House sale exchanges handled by its estate agents were up 20% in the first half, and it said its pipeline of agreed house sales is 27% higher than a year ago.


Countrywide joins peers in the sector in reporting surging results thanks to the recovery in the UK housing market over the past 18 months. The industry came to a virtual standstill in the wake of the financial crisis and the recovery took several years to take hold. However, the resurgence has been accelerating, prompting the Bank of England to take steps to try and slow the pace down by putting tougher conditions on mortgage lending. Early indications in recent house price data suggest this is working.


"Even though the rate of growth in the UK housing market has recently slowed, the strength of our results has been underpinned by stability of earnings from our lettings and commercial businesses," Countrywide said in its statement.


"The UK housing market continues to grow at a measured pace, with recovery in both transaction volumes and house prices underpinning the strong momentum we are experiencing across all our divisions. As a result, we are confident that Countrywide will deliver its best ever group performance this year," interim Chairman David Watson said in a statement.


Countrywide listed on the stock market in March last year, pledging strong returns for its shareholders. Last month, it said it would pay a special dividend of GBP20 million, or 9.0 pence a share, to its shareholders, returning the cash it got from the sale of most of its stake in Zoopla. It also said it would update its long-term dividend guidance with its interim results.


On Thursday, it said it will pay an interim dividend of 5.0 pence, up from 2.0 pence last year, alongside the special dividend of 9.0 pence on September 15.


It also said it is now targeting an ordinary dividend of between 35% and 45% of annual reported profit after tax but before amortisation, up from the 25% to 35% target it had set at the time of its IPO.


"In the absence of a major acquisition and assuming the continuation of the recent recovery in the residential housing market, the board anticipates that starting in 2015 the combined value of the ordinary dividend and any supplemental return of cash will be between 60% and 70% of reported group profits for the financial year after tax but before any amortisation," it said.


"This will be further augmented by the realisation of value from the remaining Zoopla shareholding. Our present intention is that supplemental return of cash will be by way of a special dividend or a share repurchase programme depending on the prevailing market conditions and the views of our shareholders," it added.


Countrywide shares were up 2.5% at 528.00 pence Thursday morning, one of the biggest gains on the FTSE 250.







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Source: Alliance News


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