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Annual Report 2018

2018 was a year of reset for the Group. Significant progress was made on the implementation of our "back to basics" principle in Sales and Lettings first announced in early 2018 and the Company’s recapitalisation, completed in August 2018, ensured that we have the right long-term capital structure in place to focus on our three-year turnaround plan.

Operational progress in building back industry expertise within Sales and Lettings has supported growth in the register of properties available for sale, improved the pipeline of agreed sales in the UK and increased income from complementary services:

  • The build back of expertise is now largely complete with a full complement of staffing and separate sales and lettings expertise at regional and branch management level.
  • The register of properties available for sale in UK Sales and Lettings was up 9% year on year.
  • The pipeline of agreed sales awaiting exchange of contracts in UK Sales and Lettings was up 5% having begun the year with a 21% opening pipeline deficit.
  • Income from complementary services for each £1 of estate agency income for the year was 44p (2017: 38p).

Summary of financial results

  • Group income for the full year was £627.1 million, down 7%. As previously reported, this was principally driven by the opening pipeline deficit in Sales.
  • Adjusted EBITDA was £32.7 million, down 50% and includes £2.2 million of net charges, unrelated to current trading, resulting from a review of the carrying value of certain assets and liabilities.
  • Loss after tax of £218.2 million (2017: £207.3 million) reflecting £245.4 million of principally non-cash exceptional charges for goodwill, intangible and other asset impairments.
  • Net debt at 31 December 2018 was £70.7 million (2017: £196.4 million), with net debt to adjusted EBITDA of 2.2x (2017: 3.0x)

Commenting on the results and outlook, Executive Chairman, Peter Long said:

"We have been encouraged by the progress made in 2018 in resetting the business as part of our return to growth strategy. The principles within “back to basics” in Sales and Lettings resulted in growth in the register and the sales pipeline in the UK, coupled with an increase in market share of listings.

We encountered market weakness in Q4 due to the further uncertainties surrounding Brexit which is affecting both our sector and consumer confidence as a whole. These headwinds have continued into 2019. As a result, we are experiencing further slow-down in residential and commercial property transactions particularly in London and the South, which will affect our H1 EBITDA by some £3 - £5 million. Whilst we expect full year EBITDA to be broadly in-line with 2018 (after mitigating the impact of the ban on tenant fees of £9 million), it is contingent on recovering the H1 shortfall in our traditionally stronger H2. As a Group we are in a stronger position than we have been for some considerable time with sound business fundamentals and, despite the difficult market conditions we are facing, we remain confident in delivering our turnaround."

Read Annual Report 2018