CWD.L Regulatory News (CWD)

Countrywide plc

Condensed Consolidated Interim Financial Report

For the six months ended 30 June 2015

Robust progress demonstrates the importance of diversification

30 July 2015: Countrywide plc (LSE: CWD), the UK's largest integrated property services group, announces its results for the six months ended 30 June 2015.

FINANCIAL HIGHLIGHTS

· Group income grew to £338.6 million, however, a difficult UK housing market led to £41.0 million of EBITDA versus £45.0 million in the same period last year

· Circa 50% of profits now independent of UK housing transaction market (circa 40% at FY 2014) reflecting the increased diversity of our revenue streams

· Strong growth in commercial division with Lambert Smith Hampton's total income up 32%, from £33.7 million to £44.3 million, and EBITDA up 43%, versus H1 2014

· Total income and EBITDA in Lettings segment both rose 7% against H1 2014

· Surveying Services reported a 13% increase in total income and 59% rise in EBITDA, to £7.6 million, against H1 2014

· Interim dividend of 5.0 pence (net) per share (2014: 5.0 pence), payable on 9 October 2015

OPERATIONAL HIGHLIGHTS

· Impact of residential market performance offset in part by ongoing Group diversification and outperformance of Commercial (Lambert Smith Hampton), Surveying and Financial Services segments, reflecting increased resilience of business

· 17 businesses acquired for a total of £41.1 million, with prior acquisitions now delivering organic growth; healthy pipeline of potential deals in place for the second half of 2015

· Implementation of new business strategy, Building our Future, underway with a target to double the size of the business by 2020

· Reorganisation of the business into four units comprising Retail, B2B, London and Financial Services and a number of senior executive appointments announced to support the delivery of the Building our Future programme

· Indications of improvement in residential market since period end, with indicators pointing to volume growth as confidence improves

* Earnings before interest, tax, depreciation, amortisation, exceptional items, share-based payments and share of profits from joint venture, referred to hereafter as 'EBITDA' (see note 8 for reconciliation)

** Before exceptional items, amortisation of acquired intangibles and share-based payments (net of taxation impact)

Grenville Turner, Chairman at Countrywide plc, commented:

"While we remain cautious, we are also optimistic as our broad-based business with diversified revenue streams provides a safeguard against the housing market cycle and the predicted continued growth in our lettings and commercial businesses are encouraging for the delivery of our strategic ambitions. Our acquisition programme is well positioned to take advantage of these positive trends, while prior acquisitions continue to deliver growth.

"We are keen to look beyond 2015 to ensure we have the building blocks for real growth and value added activity in place so we can deliver a significant level of shareholder returns in coming years with significant incremental returns from 2017 onwards."

Alison Platt, Chief Executive, added:

"As anticipated, the first half of the year saw depressed activity in the UK residential sales market as UK consumers held back from making decisions pending the outcome of the most uncertain General Election in a generation. However, the benefits of our strategy to diversify the Group's revenue streams were underlined by Countrywide's ability to ride those challenges with 50% of our profits derived from sources independent of the UK housing transaction market.

"Particularly pleasing has been our ability to show resilience through a tough market and at the same time to make strong headway in implementing our Building our Future strategy. Our focus for the strategy is on growth and building a business which is bigger, because it is better.

"I firmly believe that our success is attributable to the continued support and commitment of everyone at Countrywide. We have the experience and passion to create the best environment and structure for our people to deliver outstanding customer experience while ensuring we capitalise upon all the opportunities offered by the UK property sector, both residential and commercial."

For further information please contact:

· Investors

Alison Platt Chief Executive Officer

Jim Clarke Chief Financial Officer +44(0)7970 477299

· Media

Press office +44(0)7721 439043

Caroline Somers +44(0)7515 919588

· Richard Sunderland FTI Consulting +44 (0) 20 3727 1000

 Dido Laurimore Countrywide@fticonsulting.com

 Claire Turvey

CHAIRMAN'S STATEMENT

As forecast at the full year results, the first half of 2015 was a testing period for the UK residential property sector, underlining the importance of our ongoing emphasis on the diversification of the business. We remain the largest residential property services business in the UK which provides us with a degree of insulation against housing market conditions. As anticipated, the General Election and uncertainty around housing policy statements in party manifestos discouraged people from transacting in the property market, even though mortgage rates were extremely favourable. Since the General Election result, there has been clarity around the mansion tax, rent controls, right to buy and a government commitment to build more houses, but this has yet to translate into any significant improvement in consumer confidence and increased transaction volumes. However, in addition to the Help to Buy and first time buyer schemes, we are confident that the environment is now stable and supportive of growth across the wider housing sector in the medium term.

The decline in transactions which was reported in Q4 2014 continued into 2015, with UK housing market transactions in Q1 2015 down 13% on Q1 2014, as reported by the Land Registry and Register of Scotland. We expect the 12% reduction in our H1 2015 transaction volumes to be in line with the wider market performance.

Despite this tougher backdrop, Countrywide delivered a healthy £41.0 million adjusted EBITDA (2014: £45.0 million) with growth reported in four of our divisions and the diversification of our Group helping to deliver a marginal increase of 1% in total income. As expected, our estate agency based divisions suffered most due to the weaker housing market conditions, which is reflected in the reported adjusted earnings of 10.3 pence per share (H1 2014: 12.6 pence). Consistent with our previously stated policy, our interim dividend has been held at the previous year's level despite the reduction in earnings per share and the planned investment in our strategy programme. The Board of directors has approved the payment of an interim dividend of 5.0 pence per share (H1 2014: 5.0 pence) to shareholders on the register on 11 September 2015.

At 30 June 2015 we had £169.6 million of net debt (excluding finance leases) and £50 million undrawn from our facilities. In February 2015 we increased our financing facilities to £250 million and at the same time converted the whole facility to a revolving credit facility, with reduced interest margins, due to expire in March 2018. We raised these additional funds to support our acquisition plans and I am pleased to report that we made strategic investments of £41.1 million in 17 businesses, across three business segments (Lettings, London & Premier and Lambert Smith Hampton), in the six month period to 30 June 2015.

While 2014 was a year of two halves for our business, it appears that 2015 will be similar, though to what extent is not clear at this stage. It is expected that the near term level of transactions will remain challenging, with a slower than expected post-election recovery. While indications of an upturn are on the horizon, as leading indicators point towards transaction growth, there is not enough concrete evidence yet of a pick-up in buyer and seller activity to make overall transaction growth this year look likely.

While we remain cautious, we are also optimistic as our broad-based business with diversified revenue streams provides a safeguard against the housing market cycle and the predicted continued growth in our lettings and commercial businesses is encouraging for the delivery of our strategic ambitions. Our acquisition programme is well positioned to take advantage of these positive trends, while prior acquisitions continue to deliver growth.

We have started to implement our Building our Future programme and we are pleased to welcome a number of new talented people to the executive and senior management team who will support the four new business areas.

We are keen to look beyond 2015 to ensure we have the building blocks for real growth and value added activity in place so we can deliver a significant level of shareholder returns in coming years with significant incremental returns from 2017 onwards.

Outlook

We are beginning to see the green-shoots of a post-election recovery and with a typical cycle of 13 - 14 weeks to convert pipeline to exchange, this is encouraging for building positive momentum into 2016. The first half transaction volumes are probably at a level which means full year-on-year transactions are likely to be marginally below 2014 levels. Our H1 results reflect the benefit of a broadly based business and we expect those divisions showing a strong start to continue that trajectory in the second half of the year. Despite the challenging start to the year, it is our view that 2015 will show year-on-year growth in EBITDA for the Group.

Grenville Turner

Chairman

30 July 2015

CHIEF EXECUTIVE'S REVIEW

The breadth and resilience of Countrywide's business has once again served us well and provided a platform for steady first half performance despite significant challenges in the residential sales market across the UK.

As anticipated, the first half of the year saw depressed activity in the UK residential sales market as UK consumers held back from decision making pending the outcome of the most uncertain General Election in a generation. In particular, the potential for the introduction of a punitive 'mansion tax' had a dampening effect on London and the South East where the post-election rebound was felt almost immediately.

However, the benefits of our strategy to diversify the Group's revenue streams were underlined by Countrywide's ability to ride those challenges with 50% of our profits derived from sources independent of the UK housing transaction market.

Particularly pleasing has been our ability to show resilience through a tough market and at the same time to make strong headway in implementing our Building our Future strategy. Our focus for the strategy is on growth and building a business which is bigger because it is better.

Building our Future

Our purpose: Bringing people and property together.

Our vision:

· The most recommended company in the property sector

· Recognised as one of the best places to work in the UK

· Transforming the reputation of our industry

· Celebrated for excellent sustainable financial performance

We are now focused on accelerating the pursuit of our vision and implementing the strategy.

I recently announced changes to the way we are organised, creating four business units (Retail, B2B, London and Financial Services) focused around our core customers with the aim of enabling us to optimise the returns we get from satisfying the multiple needs customers have in their life-long relationships with property. The business units are also organised to bring leadership and decision making closer to the markets in which they operate, recognising the very local market nature of our business. The changes also reflect the importance of growth sectors in our business - such as the Private Rental Sector, Financial Services, Land & New Homes and Commercial.

I have also taken the opportunity to strengthen the executive team and enhance the experience and industry knowledge which currently exists with the addition of two new people with strong track records in retail, digital and financial services. For the purposes of these results, we are reporting under the segments below and for the full year results announcement we will report under the Retail, B2B, London and Financial Services segments.

With this strong team in place and the strategy clear, I feel confident we can make significant progress in enhancing our offerings to customers and increasing the pace at which we capitalise on the breadth of capabilities across the group. Our focus is on growth and our first half results provide a robust platform from which to go forward.

SEGMENTAL RESULTS

OPERATIONAL REVIEW

Estate Agency

In line with the wider market performance, Estate Agency has endured a challenging first half of the year with house exchanges down 12% in the first half of the year comparable to H1 2014. The division witnessed fewer properties being offered for sale, with instruction levels being down on the prior year, both before and after the General Election in May.

Whilst costs have been managed carefully, particularly in the run up to the General Election, the 14% fall in income to £86.7 million (down from £101.3 million in H1 2014) led to a significant decrease in EBITDA from £7.1 million in H1 2014 to £1.1 million.

House prices increased in the first half of the year, rising 3.6% compared to the same period in 2014. The average cash fee stayed broadly in line with previous year in the first six months, showing a positive trend in the second quarter and finished the half year strongly, which bodes well for the second half.

Our Land & New Homes business performed better than our core agency with 9.6% year-on-year growth in house exchanges in the first six months of 2015.

In 2015 we have rolled out the use of our tablet technology which has improved our back office efficiency and our time in bringing properties to market. This was achieved whilst maintaining our conversion rates of property valuations through to instructions.

London & Premier

The Central London market was volatile in the first six months of 2015 mainly due to uncertainty surrounding the General Election and the unpredictable outcome.

Across the division, residential sales transaction volumes were 8% down year-on-year and the time period from agreed sale to exchange lengthened.

We were encouraged by the continued strong performance of our lettings business which continued to grow, both through expansion within our residential sales network and through increasing market share.

Our New Homes business continued to grow, with the incorporation of the Preston Bennett team (acquired by Hamptons in January 2014) bearing fruit in both operational and revenue terms.

During this period we continued with our strategic expansion plans, acquiring three businesses for a total investment of £22.1 million: John Curtis Ltd (a two branch agency business in Harpenden and Wheathampstead), Greene & Co (a seven branch business stretching across North West London) and Ikon Consulting Limited.

Lettings

Our Lettings division delivered further growth with revenue up by 7% translating into a 7% uplift in EBITDA. The number of properties under management increased by 8% to almost 70,000.

Further expansion, in line with the targeted acquisition strategy continued with twelve small acquisitions totalling £7.4 million completed during the first half of 2015, with a pipeline of acquisitions planned for the rest of the year.

We continue to invest in improving our customers' experience by increasing resources in our Property Management teams and improved systems and processes to allow for electronic signatures on documents, online services for tenant applications and further improvements to our landlord portal.

Activity levels have increased, albeit against a backdrop of a tougher market reflecting uncertainty around the General Election and the economic outlook. Applicants registrations were up 5% year-on-year, whilst properties available reduced by 11%. Despite this change in the market, properties let during the period were up 5% year-on-year. Buy-to-Let tax changes in the Government's most recent Budget were unhelpful but no material impact is expected.

Financial Services

The division delivered a robust half year performance, given the market conditions experienced in the year to date, with revenue 4% ahead of 2014 at £34.7 million, generating EBITDA of £6.1 million. Our market share now stands at its highest point since 2008.

Market conditions for the first half of the year were subdued, with overall gross mortgage lending approximately 4% behind H1 2014. Despite this, the value of our mortgage applications was 15% higher than last year, and it is encouraging to see the value of our mortgage completions at £5.1 billion, an 8% increase on H1 2014.

We expect mortgage activity to grow in Q3 and our current projection for UK total gross mortgage lending in 2015 is approximately £210 billion a 3% increase year-on-year. Due to the ongoing shift towards the broker market, we expect almost all of the headline growth to be sourced from the broker channel and, as such, we are well placed to maximise the opportunities available in the mortgage market.

Surveying Services

The division continues to deliver impressive growth figures despite a challenging overall market, with the first six months of 2015 delivering a 13% increase in income and EBITDA growth of 59%. These significant results, which are in line with expectations, have seen market share grow and are underpinned by the new contracts successfully won in 2014, as well as the investments Countrywide made in bringing 82 new surveyors into the industry through its trainee programme.

The number of surveys completed by our in-house team is 9% above June 2014 and encouragingly the average fee is 6% above the 2014 comparable.

The unrelenting focus on risk management is key within the division with continual investments being made in this area to ensure that the business, its customers and clients are protected going forward. Historic claims relating to the period from 2004 to 2008 are performing in-line with our expectation and we are satisfied with the provisions currently being held.

Conveyancing Services

As expected, the division encountered a challenging start to 2015, posting an income figure of 6% below the impressive results achieved in H1 2014, translating into an EBITDA that is 17% below the comparative period last year.

The division began 2015 with a pipeline of instructions that was lower than anticipated, given 2014 figures. The shortfall was generally due to lower activity in the general housing market. Alongside a slowing pipeline in April and May 2015 because of the General Election, the division ended up completing 1,800 fewer transactions than in the same period in 2014.

In the last twelve months the business has placed significant emphasis on the implementation of sustained improvements to the service we offer our customers and also to how we successfully market our improved services to them. Early results throughout this transitional phase have been very encouraging and are providing confidence for the second half of 2015 and beyond.

Lambert Smith Hampton

The first six months of the year saw Lambert Smith Hampton deliver strong results. Revenue of £44.3 million and EBITDA of £4.5 million showed year-on-year growth of 32% and 43% respectively.

The division benefited from the continued pipeline of work carried over from last year. Our transactional business delivered a 38% year-on-year increase in revenue, in line with the increased value of transactions which our Capital Markets team advised on in the first half of the year.

Investment in the Commercial arm of the business continues with two further acquisitions, ES Group, the UK's 21st largest multi-disciplined property consultancy and Tushingham Moore, the largest retail shopping centre specialist outside of London completed in the period, for a total investment of £11.6 million. These complement the current business and align with our strategy of using our skills to generate revenue and profit across the whole property lifecycle.

Exceptional items

As a result of an increasing number of acquisitions that, for commercial reasons, comprise a significant element of contingent consideration which is deemed remuneration under IFRS 3 'Business combinations', we have decided to report these costs, along with acquisition costs, as exceptional costs because the short term impact on the underlying businesses would be material and distort business performance. In the first half of 2015 we charged £2.9 million in contingent consideration and £0.6 million in acquisition expenses.

During 2015 we have closely monitored our professional indemnity claims and I am pleased to report that our experience to date is consistent with our expectations at the year end. We received over 60% fewer valuation claims in this half year and the vast majority related to claims in respect of surveys conducted between 2004 and 2008. As a result of our review, we are confident that the provision held in our balance sheet at 30 June 2015, £33.8 million, fairly represents our potential liabilities and therefore no additional exceptional charges are currently expected.

Cashflow and balance sheet

In February 2015, we increased our financing facilities to £250 million and at the same time converted the whole facility to a revolving credit facility, with reduced interest margins, expiring in March 2018. Funds of £80 million have been drawn down during the period, principally to finance the continued progression of acquisitions.

A key focus for expansion within the Group remains the diversification of revenue streams in building a more resilient business. To this end, the Group has completed the acquisition of 17 businesses during the six month period ended 30 June 2015 for a total of £41.1 million and we have a pipeline of additional opportunities identified for the second half of the year.

The Group's investments have continued to perform well, with investments in the Zoopla Property Group plc benefiting from a revaluation gain of £13.6 million and an increase in value of the investment in residential property fund of £0.5 million. At 30 June 2015, the Group had net assets of £530.6 million (31 December 2014: £531.6m) and net debt (including finance lease liabilities) of £179.9 million (31 December 2014: £103.1 million), with a net debt/equity ratio of 34% (31 December 2014: 19%).

The Board's assessment in relation to going concern is included in note 3 to the financial information.

Our people

In addition to the strengthened executive team now in place, we have award-winning teams across our business units providing excellent customer service to our customers every day. To date in 2015, our award wins include:

Letting Agency of the Year Awards 2015 - The Times/The Sunday Times

· Best National UK Large Lettings Agency - Countrywide - Gold

· Best London Agency - John D. Wood & Co. - Silver

· Best Property Management Agency - Countrywide - Silver

Financial Reporter Awards 2015

· Best Surveyor/Valuer - Countrywide Surveying Services

The ESTAS Estate Agent Awards 2015

· Best National Estate Agency - Countrywide - Gold

· Regional Awards - Countrywide - wins 17 awards

Mortgage Strategy Awards 2015

· Best Network up to 300 appointed representatives - Mortgage Intelligence

I firmly believe that our success is attributable to the continued support and commitment of everyone at Countrywide. We have the experience and passion to create the best environment and structure for our people to deliver outstanding customer experience while ensuring we capitalise upon all the opportunities offered by the UK property sector, both residential and commercial.

Alison Platt

Chief executive officer

30 July 2015

PRINCIPAL RISKS AND UNCERTAINTIES

There are a number of risks and uncertainties facing the business in the second half of the financial year. The Board has reconsidered the risks and uncertainties listed below:

· housing market risk;

· availability of mortgage financing;

· loss of a major business partner or outsourcing partner;

· IT infrastructure and information security;

· professional indemnity;

· financial misstatement and fraud risk;

· regulatory compliance; and

· attracting, developing and retaining excellent people.

These risks and uncertainties and mitigating factors are described in more detail on pages 18 to 19 of the Countrywide plc financial statements for the year ended 31 December 2014 (a copy of which is available on the Group's website). Having reconsidered these risks and uncertainties the Board considers these to remain appropriate. In addition, inherent in any organisational structure changes and strategic transformation are associated implementation risks. These risks have been incorporated into the risk register and a transformation and change director has been appointed.

FORWARD LOOKING STATEMENTS

This report may contain certain 'forward-looking statements' with respect to some of the Group's plans and its current goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. By their nature, all forward-looking statements involve risk and uncertainty. A number of important factors could cause the Group's actual future financial condition or performance or other indicated results to differ materially from those indicated in any forward-looking statement. We refer you to the Group's financial statements which can be downloaded from the Group's website: www.countrywide.co.uk/investor-relations. These documents contain and identify important factors that could cause the actual results to differ materially from those indicated in any forward-looking statement.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors confirm that this condensed consolidated interim financial report has been prepared in accordance with International Accounting Standard 34 'Interim financial reporting', as adopted by the European Union and that the interim report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

· an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

The directors of Countrywide plc are listed below:

On behalf of the Board

Alison Platt Jim Clarke

Chief executive officer Chief financial officer

30 July 2015 30 July 2015

Condensed consolidated interim income statement

For the six months ended 30 June 2015

The notes are an integral part of this condensed consolidated interim financial report.

Condensed consolidated interim statement of other comprehensive income

For the six months ended 30 June 2015

The notes are an integral part of this condensed consolidated interim financial report.

Condensed consolidated interim statement of changes in equity

For the six months ended 30 June 2015

The notes are an integral part of this condensed consolidated interim financial report.

Condensed consolidated interim balance sheet

As at 30 June 2015

The notes are an integral part of this condensed consolidated interim financial report.

Condensed consolidated interim cash flow statement

For the six months ended 30 June 2015

The notes are an integral part of this condensed consolidated interim financial report.

Notes to the condensed consolidated interim financial report

1. General information

Countrywide plc ('the Company') and its subsidiaries (together, 'the Group') offer estate agency and lettings services, together with a range of complementary services, and have a significant presence in key areas and property types which are promoted through locally respected brands.

The Group operates in seven complementary businesses: (i) residential property sales; (ii) London & Premier residential property sales; (iii) residential property lettings and property management; (iv) arranging mortgages, insurance and related financial products (provided by third parties) for participants in residential property transactions; (v) surveying and valuation services for mortgage lenders and prospective homebuyers; (vi) residential property conveyancing services; and (vii) commercial property consultancy, property management and advisory services. The Group seeks, through the breadth of its product offering, to capture revenue streams across the full range of stages of a typical residential property sale or rental, from listing to completion or letting.

The Company is a public limited company, which is listed on the London Stock Exchange and incorporated and domiciled in the UK (registered number: 08340090). The address of its registered office is County House, 100 New London Road, Chelmsford, Essex CM2 0RG.

This condensed consolidated interim financial report was approved for issue on 30 July 2015.

This condensed consolidated interim financial report does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Consolidated financial statements for Countrywide plc for the year ended 31 December 2014 were approved by the Board of directors on 26 February 2015 and delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

This condensed consolidated interim financial report has been reviewed, not audited.

2. Basis of preparation

This condensed consolidated interim financial report for the six months ended 30 June 2015 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34 'Interim financial reporting', as adopted by the European Union. The condensed consolidated interim financial report should be read in conjunction with the annual financial statements of Countrywide plc for the year ended 31 December 2014, which have been prepared in accordance with IFRSs as adopted by the European Union.

3. Going concern

The Board of directors has reviewed cash flow forecasts, which have been stress tested with various assumptions regarding the future housing market volumes, and reassessed the likelihood and impact of the principal risks crystallising. On the basis of this, the directors have concluded that it is appropriate to prepare the condensed consolidated interim financial report on a going concern basis.

4. Accounting policies

The accounting policies adopted in the preparation of this condensed consolidated interim financial report are consistent with those of the previous financial year, except as stated below.

Material investment property acquisitions were made in 2014 and stated at fair value with gains arising from changes in the fair value of investment property included in profits for the year to which they relate. As stated in note 16 of the 2014 consolidated financial statements, on 23 October 2014, investment property held by the Group was transferred into a separate, unlisted, residential property fund, Vista UK Residential Real Estate Unit Trust (formerly named, at the time of transfer, Albion PRS Investments Unit Trust). In exchange, the Group received units in the property fund. The full independent fund structure, effectively removing any exercise of control to an independent trustee, was not in operation at the 2014 year end. The results of the trust were therefore consolidated at the year end.

However, completion of the independent fund structure and removal of the ability of the Group to control, or exercise significant influence over, the structure occurred on 15 May 2015. From this date, the property fund units were transferred to available-for-sale financial assets with subsequent changes in valuation being recorded in other comprehensive income. Please refer to notes 6 and 18 for further details.

Exceptional items are disclosed and described separately in the financial statements where it is necessary to do so in order to provide further understanding of the financial performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature or amount.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

In addition, the annual improvements to amend existing standards which are mandatory for accounting periods beginning 1 January 2015 have had no material impact on the Group's condensed consolidated interim financial report.

5. Critical accounting judgements and estimates

The preparation of the condensed consolidated interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2014 with the exception of changes in estimates that are required in determining the provision for income taxes.

6. Financial risk management and financial instruments

Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (including cash flow interest rate risk), counterparty credit risk and liquidity risk.

The condensed consolidated interim financial report does not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 31 December 2014.

There have been no changes in the operation of risk management or in any risk management policies since the year end.

Liquidity risk

Compared to the year end, there was a material change in the contractual financial liabilities (see note 20). Following the renegotiation of the existing term loan and revolving credit facility (amounting to £200 million) during February 2015 and the restructuring the facility to a solely revolving credit facility (amounting to £250 million), an additional £80 million of the revolving credit facility has also been utilised during the period.

Fair value estimation

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined, in accordance with IFRS 13 'Fair value measurement', as follows:

· quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

· inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from process) (Level 2); and

· inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The following table presents the Group's assets and liabilities that are measured at fair value at 30 June 2015:

The following table presents the Group's assets and liabilities that are measured at fair value at 31 December 2014:

There was a transfer of investment property into available-for-sale financial assets during the period arising from the loss of control of the investment property fund as planned (see note 4). There was no change in valuation technique from that applied at 31 December 2014 and the fair value hierarchy of the investment property within the investment property fund has remained at Level 2. The fair value of the investment property fund has been arrived at on the basis of a valuation carried out at that date by CBRE Limited, independent valuers not connected with the Group. The valuation conforms to International Valuation Standards. The fair value was determined based on comparable market transactions on arm's length terms and has been based on the Market Rent valuation technique.

Fair value measurements using significant unobservable inputs (Level 3) and valuation processes

The Group's finance department performs the valuations of financial assets required for financial reporting purposes, including Level 3 fair values where appropriate. This team reports directly to the chief financial officer and the Group Audit & Risk Committee. Discussions of valuation processes and results are held between the chief financial officer, Group Audit & Risk Committee and the valuation team in line with the Group's half-yearly reporting dates.

The transfer from level 3 to level 1 in the 6 month period ended 30 June 2014 relates to shares held in Zoopla Property Group plc which listed on the London Stock Exchange on 17 June 2014.

The fair value of put options is undertaken using a discounted cash flow based on management's expectation of performance of the underlying entities, consistent with operating plans approved. This method continues to be based on unobservable market data, and therefore there have been no changes in valuation techniques adopted in the year and no changes in fair value hierarchies in respect of these liabilities.

The fair value of all other financial assets and liabilities approximate to their carrying amount.

7. Seasonality of operations

The UK housing market is seasonal, with peaks in the summer months. In the financial year ended 31 December 2014, 48% of total income accumulated in the first half of the year, with 52% accumulating in the second half. The Group's operating profits are typically higher in the second half than in the first half of the year because, while fixed costs (such as wages, salaries and finance costs, which are not seasonal) tend to be consistent throughout the year, volumes of transactions in the second half are typically higher and therefore there is a higher marginal contribution over such fixed costs.

8. Operating segment information

Management has determined the operating segments based on the operating reports reviewed by the Executive Committee (replacing the Governance and Performance Committee) that are used to assess both performance and strategic decisions. Management have identified that the Executive Committee is the chief operating decision maker in accordance with the requirements of IFRS 8 'Operating segments'.

The Executive Committee considers the business to be split into seven main types of business generating revenue: Estate Agency, London & Premier, Lettings, Financial Services, Surveying Services, Conveyancing Services and Lambert Smith Hampton, and all other segments comprise central head office functions.

The Estate Agency division generates commission earned on sales of residential and commercial property. London & Premier revenue is earned from both estate agency commissions and lettings and management fees. The Lettings division earns fees from the letting and management of residential properties and fees for the management of leasehold properties. The Financial Services division receives commission from the sale of insurance policies, arrangement of mortgages and related products under contracts with financial service providers. Surveying and valuation fees are received primarily under contracts with financial institutions with some survey fees being earned from home buyers. Conveyancing revenue is earned from conveyancing work undertaken from customers buying or selling houses through our network. Lambert Smith Hampton's revenue is earned from commercial property consultancy and advisory services, property management and advisory services. Other income generated by head office functions relates primarily to sub-let rental income or other sundry fees.

The Executive Committee assesses the performance of the operating segments based on a measure of adjusted EBITDA. This measurement basis excludes the effects of exceptional items, share-based payments charges and related employers' National Insurance contributions and income from joint ventures. Finance income and costs are not allocated to segments as this type of activity is driven by the central treasury function which manages the cash and debt position of the Group.

Sales between segments are carried out at arm's length. The revenue from external parties reported to the Executive Committee is measured in a manner consistent with that in the income statement.

The following table presents revenue and profit information regarding the Group's operating segments for the six months ended 30 June 2015 and 2014 respectively.

Total income

EBITDA before exceptional items

A reconciliation of total EBITDA before exceptional items to total profit before income tax is provided as follows:

Since the preparation of the last financial statements, the Lettings division has acquired twelve businesses, the London & Premier division has acquired three businesses and Lambert Smith Hampton has acquired two businesses (see note 9). Other than this there has been no material change in segment total assets or liabilities from the amount disclosed in the last annual financial statements.

There are no differences from the last annual financial statements in the basis of segmentation or in the basis of measurement of segment profit or loss. The Executive Committee is reviewing restructuring the reportable business segments for the latter half of 2015. The revised segmentation will reflect the internal restructuring announced on 3 July 2015. Full details of any restructuring, and the resultant impact on income and EBITDA (including comparative data), will be announced in the final quarter of 2015 on the investor relations section of our website and incorporated within the annual financial statements for 2015, but the existing structure remains unchanged for the half year reporting.

9. Business combinations

Acquisitions

During the six months to 30 June 2015 the Lettings division acquired twelve lettings operations as part of its targeted acquisition strategy to expand in certain under-represented geographical areas. The total consideration in respect of these acquisitions was £7.4 million. The London & Premier division acquired three businesses, including Greene & Co, as part of its targeted acquisition strategy to expand in certain under-represented geographical areas, for a consideration of £22.1 million. Lambert Smith Hampton acquired two businesses, including Edward Symmons Group, as part of its targeted acquisition strategy to expand the Group's commercial offering, for a consideration of £11.6 million.

Provisional assessment of fair values at acquisition

A provisional assessment of the fair value of assets and liabilities acquired is presented in this interim report. Owing to the proximity of several acquisitions to the reporting date, there may be some reclassifications when reporting at the year end. The valuation techniques applied are consistent with previous years.

On 10 March 2015, the Group acquired the trade and assets of Edward Symmons Group, in accordance with the strategy to increase the Group's commercial footprint and non-cyclical revenue streams.

On 7 May 2015, the Group acquired 100% of the equity share capital of The Greene Corporation Limited and five subsidiary companies, in accordance with the strategy to increase the Group's lettings footprint in under-represented geographical areas.

The acquired receivables for all acquired businesses are all current and their fair value is not materially different. There are no contractual cash flows that are not expected to be collected. The goodwill recognised by the Group upon acquisition has no impact on tax deductions. No other contingent liabilities, not included in the net assets above, have been identified on these acquisitions.

The goodwill of £25.8 million arises from a number of factors including expected synergies, including cost reductions from purchasing and processing efficiencies, and unrecognised assets such as the assembled workforces.

Acquisition costs of £0.6 million have been charged to exceptional costs in the condensed consolidated income statement for the period end. The deferred consideration noted above is payable over a period of six years as fixed payments at specified times in line with the purchase agreements. In addition, contingent consideration arrangements arising on four of the acquisitions made during the period require the group to pay in cash a potential undiscounted maximum aggregate amount of £6.9 million.

Each of these contingent consideration arrangements require the vendors to remain in employment and as such have been treated as a post-combination employment expense, excluded from consideration noted above, and are being accrued over the relevant periods of one to three years specific to each of the agreements. £2.3 million of this contingent consideration is also subject to performance conditions being satisfied. These are target EBITDA levels which must be achieved in order to realise the full payment, with a reduced payment made if targets are not fully met. The accrual has been made on the assumption that each target will be fully met and the £2.3 million will be payable over the earn-out period.

10. Exceptional items

The following items have been included in arriving at loss before taxation:

2015

During 2015 there has been continued amortisation of the deferred income in relation to Zoopla Property Group plc warrants which will continue to unwind over the remainder of the year to 31 December 2015.

As a result of an increasing number of acquisitions during the period that, for commercial reasons, comprise a significant element of contingent consideration which is deemed remuneration under IFRS 3 'Business combinations', we have decided to report these costs, along with acquisition costs of £0.6 million, as exceptional costs because the short term impact on the underlying businesses would be material and distort underlying business performance.

During the period the Group has commenced the 'Building our Future' strategic review and incurred external consultancy costs in relation to the project and related restructuring costs, principally in relation to high level redundancies, which were also announced externally prior to 30 June 2015.

On 19 March 2015, the Competition and Markets Authority (CMA) concluded its investigation into an association of estate and lettings agents in Hampshire. Hamptons Estates Limited was one of three parties forming part of an association that admitted arrangements which had the object of reducing competitive pressure on estate agents and lettings agents' fees in the local area in and around Fleet in Hampshire. The exceptional cost above reflects the penalty payable to the CMA and associated legal costs.

2014

Amortisation of the deferred income in relation to Zoopla Property Group plc warrants which are being amortised over the period 2012 to 2015.

In addition, the Group disposed of a significant proportion of its shareholding in Zoopla Property Group plc as part of the IPO process in June 2014 and the associated profit is disclosed above.

11. Income taxes

Income tax expense is recognised based on management's estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 31 December 2015 is 20.6%.

The estimated tax rate for the six months ended 30 June 2014 was 23.2%.

12. Dividend

An interim dividend of 5.0 pence (net) per share (2014: 5.0 pence (net) per share), amounting to a total dividend of £10,981,333 (2014: £10,972,248), was proposed by the Board of Directors on 29 July 2015. The dividend is payable on 9 October 2015 to shareholders who are on the register at 11 September 2015. In accordance with IAS 10 'Events after the balance sheet date', dividends declared after the balance sheet date are not recognised as a liability in these financial statements.

13. Earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares of Countrywide plc.

For diluted earnings per share, the weighted average number of ordinary shares in existence is adjusted to include all dilutive potential ordinary shares arising from share options.

14. Property, plant and equipment and intangible assets

Capital commitments

Under agreements with CGI, for the outsourcing of IT arrangements, the Group has committed to a computer hardware refresh programme. Capital expenditure contracted (in respect of property, plant and equipment) for at the end of the reporting period but not yet incurred, relating to 2015 and the three subsequent years, was £2.8 million (31 December 2014: £3.7 million).

15. Goodwill

16. Investments

17. Trade and other receivables

18. Investment property

19. Trade and other payables

20. Borrowings

On 9 February 2015 the Company entered into an Amendment and Restatement Agreement relating to the term and revolving credit facility agreement, originally dated 20 March 2013, which is due to expire in March 2018. The facility is now £250 million revolving credit facility (RCF), with no term loan elements, with any outstanding balance repayable in full on 20 March 2018. Interest is currently payable based on LIBOR plus a margin of 1.75%. The margin is linked to the leverage ratio of the Group and the margin rate is reviewed twice a year (and can vary between 1.5% and 2.25%). The RCF is available for utilisation subject to satisfying fixed charge and leverage covenants and £80 million was drawn down during the period.

The unsecured loan notes (classified as 'Other loans' above) are non-interest bearing.

21. Deferred income

The Group recognises deferred income as a result of cash received in advance in relation to certain sales distribution contracts and lease incentives relating to the Group's operating leases. The cash is received and amortised over the life of the contract to which it relates. The non-cash portion relates to unamortised income created on acquisition of Zoopla Property Group plc shares (see note 10).

22. Provisions

Claims and litigation provisions comprise the amounts set aside to meet claims by customers below the level of any professional indemnity excess, the estimation of incurred but not received claims and any amounts that might be payable as a result of any legal disputes. The provisions represent the directors' best estimate of the Group's liability, having taken professional advice.

23. Share capital

24. Reserves

The following table provides a breakdown of 'Other reserves' showed on the consolidated statement of changes in equity.

25. Related party transactions

Transactions with key management personnel

Key management compensation amounted to £4.5 million for the six months ended 30 June 2015 (30 June 2014: £11.1 million). See below for details:

Trading transactions