Countrywide plc (lon:cwd)
Countrywide – Broke A Golden Rule Of Mine

Countrywide plc Financials

ItemCurrent PeriodPrevious Period
Year20192018
Period6 Months6 Months
Revenue£291m£303m
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA£33m£66m
Statutory Profit(£38m)(£206m)
Adjusted Profit
Total Debt
Net Debt£90m£212m

Commentary History
Countrywide plc Share Price
Grade:The Black Grade - Shares That I Think Could Collapse To Nothing Or Suffer A Massive Share Issue.
Title: Countrywide – Broke A Golden Rule Of Mine
Company: CWD - Countrywide plc
Share Price Then: 338p
Author: Ian Smith
Date: Mon 06 Jan 2020
Comments: I have a rule that says whenever a company does a share consolidation for the sole reason that the share price has sunk so low that it is embarrassing pretty much give up hope in the current management.

Countrywide have just done such a thing, a 50 for 1 swap bringing the price up from around 7p to 350p, yes the share price now looks respectable except when you consider that adjusted it is down from around 13,500p a couple of years ago.

What I usually take from this type of activity is that the management are trying to hide the fact that the business really fouled up and left its shareholders nursing massive losses.

The downside is that everyone knows this anyway and instead of people buying in, the new higher price can encourage sales before the new higher price drops taking even more value away.

Given Countrywide’s losses, massive share issue and the growth of debt I would have thought that recovering the business and recovering the markets confidence was more important than a low share price that truly reflected a failing business.

At the same time as the share consolidation they announced the sale of Lambert Smith Hampton for £38m which will go towards reducing debt from around £90m to £55m. The stated reason is that the commercial property division was requiring too much management time, as a cynic I wonder if selling a profitable division was simply a way of hiding the fact that debt was growing again.

Net debt had crept up to £90.0 million from £70.7 million in December 2018. This is after a massive £140 million fund raising in August 2018 had brought debt down from over £200m.

For all the talk of a recovery and improved expertise within the branches things are not getting better, so I wonder if the consolidation is to allow another large share issue which may have been laughed at when the shares were trading in the 3p-7p zone.
Read Count/ID: 268/10105

Buy/No Buy In A Nutshell
NegativesToo much debt and they have already done a share issue to fix that, did a 50 for 1 share consolidation to bring the shares out the penny arena
PositivesMaybe Purple Bricks or another on line only business might see the business as a quick way to establish an office presence in many towns under another name.
Initial Review Price109p
Last Review Price109p
Last Review Date15-Jul-2020
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