LONDON (Alliance News) - Shares in Countrywide PLC pushed higher on Thursday after the company tripled its dividend payout for 2014 on the back of a big rise in profit and a jump in revenue over the year, even as it was held back by a slowdown in the London property market in the second half.
The FTSE 250-listed estate agency's shares were up 3.4% to 528.5 pence Thursday, one of the best performers in the FTSE 250, after it said its pretax profit for the year to the end of December was GBP102.4 million against GBP62.9 million last year, a 63% increase.
Revenue in the year rose to GBP702.2 million, up from GBP584.8 million, boosted by strong performances in its lettings and estate agency businesses over the year.
The strong profit growth prompted the company to hike its final dividend for the year to 10 pence per share, up from 6 pence last year. Along with the interim dividend and the 9 pence special dividend the group paid earlier in the year related to the sale of its interest in Zoopla Property Group PLC, the total dividend for the year rises to 24 pence per share, from 8 pence a year ago.
Estate agency revenue rose 9% to GBP210.5 million with growth across its regional businesses and a rise in the average fee generated per exchange, despite a competitive market. Countrywide said its growth rate was slightly higher in the south, at 11%, than in the north.
Lettings revenue rose 20% to GBP134.6 million as the letting market in the UK remained stable throughout 2014. The group registered 490,000 applicants and 49,000 lets in the year, with its retail properties under management rising by 25% to 65,334 at the year-end.
But the group reported more muted growth in its London & Premier business, as a strong first half was offset by weakness in the second half, in particular a cooling London property market, specifically at the top end. Though the stamp duty regime changes announced at the end of the year did result in a flurry of activity, it was not sufficient to offset the impact of the slow second half market conditions. Revenue in the division still rose 3% to GBP118.8 million.
"The group has delivered a record set of results for 2014, its first full year of trading since IPO, which show strong growth in both income and profits, underpinned by robust recurring revenues. We anticipate some sluggishness in market trends over the first half of 2015 in the lead up to the election," said Countrywide Chairman Grenville Turner.
"However, the resilience we derive from our broad-based business, our low leverage and our proven ability to deliver growth in a challenging market positions us well to take advantage of sustainable growth in our Lettings and Commercial businesses and capitalise quickly on the upturn as the residential sales market recovers in the medium to long term," Turner added.
Panmure Gordon keeps its Hold rating and 480 pence price target on Countrywide, saying the valuation looks reasonable ahead of the uncertainties around the UK General Election.
Panmure said Countrywide's pretax profit of GBP102.4 million was in line with expectations and the hike in its dividend was as promised. The broker holds its 2015 estimates for Countrywide, saying the outlook for the UK housing market looks relatively weak for at least the first half until the General Election is out of the way.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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