Our new corporate strategy and three-year turnaround plan was announced in March 2018.
There are five key tenets to our three-year turnaround plan:
The Board is confident that the market for no-frills do-it-yourself agencies is limited, and believes that the full service estate agency model (including businesses like Countrywide that provide modern digital services alongside local branch-based operations) will retain the largest part of market share as customers continue to seek the support and professional insight of local estate agents when undertaking the biggest financial transactions of their lives. That is why we are proposing to go “Back to Basics” in Sales and Lettings to regain market share.
The delivery of integrated property services — comprising conveyancing and financial services (namely mortgages, life protection and general insurance) — is an integral part of Countrywide’s service offering, as well as its profitability. Each penny of ancillary revenue per £1 of sales revenue equates to approximately £1.8 million in earnings. Following the changes at the start of 2018, we re-invigorated the focus on selling complementary products and services by implementing new incentive structures and targets for referring complementary services.
As part of Countrywide’s turnaround plan, the Group has started a range of cost reduction initiatives that the Board believes (on the basis of certain assumptions and expectations), if successfully implemented in full, could potentially realise around £20-25 million of Adjusted EBITDA savings per annum.
In addition to the Capital Refinancing Plan, which the Board expects will realise a £4-6 million reduction in interest costs per annum, Countrywide intends to undertake further measures to improve the Group’s financial discipline. The focus areas, which the Board believes could potentially lead to improved operating cash flow conversion, are: improved working capital discipline by adding capability and improving processes over the collections of all B2B debts; an improvement programme on timeliness of billing and collections on completion of all residential property transactions; and one common pool of capital and improved capital allocation across all investment and the introduction of a Group Investment Committee comprising the Executive Committee of the Group.
In its B2B and Financial Services Business Units, the Group has strong market positions in each of the addressable markets for those businesses (by Building Societies Association data). The Group continues to see opportunities to sustain or grow each of these markets: on the basis of certain assumptions and expectations, the Board believes that these businesses could potentially grow to realise around £4-8 million of additional Adjusted EBITDA per annum.
With these actions and our improved management focus, we believe that the Group will be well positioned to deliver sustainable operating cash flow from our operations.
Download the Countrywide Prospectus 2018 for further information about our new corporate strategy and three-year turnaround plan: