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March 2009

How Countrywide suffered from the crash

By MIKE GOODMAN,
City Correspondent

COUNTRYWIDE plc posted an operating loss of £47 million in 2008, compared with a profit of £85 million the previous year, according to the annual report to bondholders and shareholders in its holding company Castle HoldCo 4. 

The report also shows   Castle HoldCo4  suffered a one off “goodwill impairment” charge of £400 million, representing  the estimated fall in the value of the group amid the credit crunch.

Plans to ease the group’s debt burden by converting debt into equity were revealed last month. They now enjoy the agreement of 80 per cent of the bond and share holders and the necessary Scheme of Arrangement is going before the courts in the UK and the Cayman Islands this month.

Group revenues fell 35 percent compared with 2007 to £413 million, while the group staff headcount fell 24 per cent to 7,600 at the end of last year as the group made tens of millions of pounds worth of economies.

Only one division, lettings, showed a profit, which rose 24 per cent from £8 million to £8.85 million, on revenues up 17 per cent to £53 million.

The estate agency division saw sales crash 47 per cent from 95,000  to 50,510. The report said that nationally, housing   transactions fell 59 per cent to 512,000. This was 38 per cent below the low point of the last recession during 1991/2.

Read Mike Goodman’s City column in April’s  EAN for more details.