Countrywide sells off loss-making firms

Countrywide has revealed it is to sell off its remortgage conveyancing operation and its Spanish estate agency, H2O Homes.

Although the firm will divest itself of these businesses, the Countrywide board says it will seek to make acquisitions in other areas.

Countrywide has chosen to sell the operations after reporting unsustainable losses on both fronts.

It admits that a specialised overseas agent would be able to offer a wider range of opportunities in the Spanish market than H20 Homes.

Meanwhile, cutthroat competition in the remortgage conveyancing market led Countrywide to cut its losses and withdraw from the fray.

But elsewhere, the signs for the company look promising. Turnover at the group increased 24%, from 528.2m in 2005 to 654.2m in 2006.

Profits before tax were 113.8m in 2006 compared with 31.7m in 2005.

This growth came in part from provisions made by the firm when private equity group 3i made its original bid for Countrywide of 490p per share.

But in January, shareholders rejected the bid. 3i needed a 75% majority of shareholders to back it but only convinced 58%.

They subsequently accepted an offer of 510p per share at the beginning of March from private equity firm Apollo Management.

Looking at the UK housing market, Countrywide says that while transactions have dipped it is confident about the market’s outlook. It has noted a rise in average house prices to 193,500, up 14,200 on 2005.

Christopher Sporborg, chairman of Countrywide, says: “While we anticipate the rate of increase in house price growth slowing we see no sign of the volume of transactions falling below the normal levels experienced recently.

“In the absence of further significant interest rate rises we believe the market is sustainable at this level. This being the case, we expect another satisfactory year.”