Countrywide proposes placing to accelerate digital rollout as FY profit falls

Countrywide's shares are down almost 5% after it proposed a cash-box placing of 21.6m shares to accelerate its digital rollout, unlock further cost savings and strengthen its balance sheet, against a backcloth of Brexit uncertainty in the property market.

News of the proposed placing followed Countrywide posting a full-year pre-tax profit of £19.5m, which was less than half the £47.7m recorded a year earlier. Total income was marginally ahead at £737.0m, from £733.7m.

Returning to the placing, Countrywide said throughout 2016 the uncertainty caused by UK's Brexit vote, alongside UK stamp-duty changes, had led to falling volumes in residential property transactions.

"The market environment remains challenging in the near-term and Countrywide expects sales market volatility to continue in 2017," it added in a statement.

Countrywide added that the sales market currently showed no sign of transaction growth and, while credit was available and interest rates remained low, market sentiment was fragile and subject to changing economic circumstances.

It noted it had been pursuing a number of self-help actions since first-quarter 2016 to build its resilience in these challenging market conditions. A review of commercial business Lambert Smith Hampton was continuing, and was seen concluding later in 2017.

"As a result, the company has determined to proceed with a placing of new shares in order to provide itself with additional financial flexibility," it said.

"Net proceeds of the placing will be used to accelerate Countrywide's digital rollout to unlock the group's further cost savings and strengthen the company's balance sheet.

"Following the placing, the company is seeking to return leverage to long-term target levels, working towards approximately 2.0x in 2017 and 1.5x to 2.0x in the longer term."

At 10:31 GMT, shares in Countrywide were down 4.67% to 178.5p each.