Countrywide full year results in line despite London housing slowdown

22nd Jan 2015 12:06

Countrywide has reported numbers of house exchanges dropped by 2% and 14% in the prime London regions in the fourth quarter but full year results for the property services group are expected to remain in line with expectations.With residential lettings up by 20% in what was a record year for this part of the business on revenue, profits and margins, total group income increased 5% in the quarter to £179.3m, for a 20% rise in income across the full year to £702.2m.Notwithstanding the slowdown in growth in the fourth quarter, the group said it expected to deliver record financial results and profits in line with market expectations."These results once again underline the resilience we derive from our broadly based business and our ability to deliver strong growth in a challenging market," said chief executive Alison Platt."We are well placed to both take advantage of the sustainable growth in our lettings and commercial business whilst being positioned to lead as the housing sales market recovers."The slowdown in volumes in the UK sales market in the fourth quarter was seen in a 2% fall in estate agency house exchanges compared to the same period last year after the 11% rise in the previous quarter.The 'London & Premier' region saw a 14% fall in exchanges, after the small 1% gain the previous quarter."Buyers remain cautious generally and particularly in London," the FTSE 250 group warned.As for how this will affect the outlook for the new financial year, the company said: "The recent negative trend in mortgage approvals will impact transaction levels in the first half of 2015 which, together with the potential uncertainty over the outcome of the General Election in May, is likely to create some sluggishness in the market trends in the first half of 2015."Broker Numis said it would leave its forecasts unchanged for 2015 and 2016 as it expects the group to see a flattish first-half "and then hopefully reduced uncertainty post the election (and increased mortgage approvals) will drive growth in the second half".Analysts pointed to "the main surprise" in the statement being that Countrywide is increasing its professional indemnity provision by a further £15m to account for an increased number of claims being brought about under common law, a slight deterioration in existing claims and a larger average claim size."To put this into context, it is only 1.5% of the group's market cap, but it clearly raises questions whether more provisions will be required in the future."