On the 10th March, we reported a strong start to the year. Activity across all major parts of our business has continued in a very encouraging manner.
Recent interest rate rises will, we believe, have a dampening effect on the residential property market – but we are currently of the opinion that a sharp correction in either volumes or prices is unlikely.
During the first six months of 2004 the estate agency division has benefited from an increase in the number of sales being arranged compared to last year and at increased house prices which feeds through into increased revenues per home sold. Consequently the value of the pipeline of commissions for contracts in the hands of conveyancers awaiting exchange stands at a record high level – some £15m (25%) higher than at the corresponding time last year.
Retail financial products continue to be arranged for a high proportion of home buyers, although we have seen some reduction in the number of mortgage related life products being taken up as buyers focus more on the level of their mortgage repayments.
Countrywide Surveyors and Countrywide Property Lawyers both continue to enjoy receiving more instructions than their current capacity can accommodate and as a consequence have to panel excess work to third parties whilst working at full capacity.
Cash generation during the first half has been strong, allowing us to return the £100m capital/dividend to shareholders a few days ago with only modest recourse to borrowing from the £100m bank facility that we have in place. We, therefore, envisage the Board comfortably contemplating dividend payments within the 2.5/3 times cover range indicated in the published listing particulars. We will announce our half-year results, which will include one-off costs associated with the de-merger of Chesnara/return of capital of approximately £9m and dividend payment on the 12th August.
