CWD.L Regulatory News (CWD)

 25 June 2018

Countrywide plc

Long term capital structure, back to basics recovery plan and trading update

Countrywide plc ("Countrywide", the "Company" or the "Group") (LSE: CWD), the UK's largest integrated property services group, today provides an update in relation to: putting in place a long term capital structure; progress on its back to basics recovery plan; and current trading.

Back to basics recovery plan

The Group is encouraged by early operational improvements since it set out its immediate priorities for a return to profitable growth at its preliminary results in March 2018. At that time, the Group announced a strategic re-set which, alongside management changes, established the foundations for the Group to return to profitable growth focused on:

· Back to basics approach in Sales and Lettings to regain market share;

· Cost efficiency; and

· Financial discipline and better cash flow conversion.

The Group has made substantial progress in re-establishing industry expertise and the right level of staffing and capability in its Sales and Lettings businesses. The register of properties available for sale is now broadly back to 2017 levels having increased by 9% since 31 December 2017. Cross-referral income within the Group has increased by 8%, with every £1 of income earned by estate agency in the first five months to May 2018 matched by a further 41 pence of income generated from estate agency referrals (FY 2017: 38 pence in every £1). On cost efficiency, we have reduced head office functions by a third. Our B2B and Financial Services businesses performed in line with the Board's expectations.

Long term capital structure

The Company is now looking to put in place a long term capital structure to reduce its indebtedness and to support its turnaround plan and growth. It is our intention to reduce the levels of debt by at least 50% through additional equity finance. Our major shareholder, Oaktree, and the Company's lender group are supportive of this approach. This process remains at an early stage and the Group will update the market on these initiatives at its interim results on 26 July 2018.

2018 trading and outlook

The market in the first half has continued to be subdued and we have experienced longer transaction cycles. As previously announced, the Group entered 2018 with our Sales pipeline significantly below that of 2017. Following a recently completed review, adjusted EBITDA is now expected to be around £20 million lower in the first half compared with the same period last year and we do not expect this shortfall to be recovered in the second half. Our focus remains on building back the Sales pipeline and we expect to substantially close the pipeline gap by the end of the year. We will provide full year guidance and a detailed recovery plan at the interim results on 26 July 2018.

Other information

This announcement contains inside information within the meaning of the Market Abuse Regulation.

About Countrywide plc

Countrywide is the UK's largest integrated property services group, including the largest estate agency and lettings network. Countrywide's network of expertise combining national scale and local reach helps more people move than any other business in the UK and is structured around four key business units: UK Sales and Lettings; London Sales and Lettings; B2B; and Financial Services.

Forward Looking Statements

This announcement has been prepared solely to provide additional information to the shareholders of Countrywide plc in order to meet the requirements of the FCA's Disclosure and Transparency Rules and the Market Abuse Regulation. It should not be relied on by any other party, or for other purposes. Forward-looking statements have been made by the directors in good faith, using information available up until the date on which they approved this statement. Forward-looking statements should be regarded with caution, because of the inherent uncertainties in economic trends and business risks.