Hambro Countrywide admits danger

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The Independent Online
HAMBRO Countrywide yesterday admitted the that decision by Hambros plc - the banking group that owns 52 per cent of its shares - to distribute its stake among its own investors, had made the estate agency and financial services group a takeover target.

Harry Hill, Countrywide's managing director, said this would give the company the benefit of its shares having far greater liquidity than they had in the past and predicted an improved share price performance in the short term.

But he conceded the group would also be more exposed to takeovers as a result of the change in its shareholding base.

He said there had been approaches during the period of uncertainty about Hambros Plc's future but there had been "nothing that has ever become totally serious" in terms of a takeover attempt.

Countrywide still harbours ambitions to grow its life assurance business through acquisition, but Mr Hill said prices were currently "rather more than we would like to pay" and the group would continue to be reactive on potential buys, with none in view.

His comments came as Countrywide reported record pre-tax profits of pounds 52.7m for 1997 and said it was optimistic about the future.

"To have made a million pounds a week is quite an achievement for a company that made a loss only a few years ago," Mr Hill said.

The profits for the year represented a 71 per cent increase on 1996 when the group reported profits of pounds 30.8m. The group said its dividend for the year would total 3p, a rise of 50 per cent on 1996.

Mr Hill said the group had "neither the need or desire" to raise any extra capital for the time being, although he conceded this would now be an easier process without Hambros as the dominant shareholder.

Only 25 per cent of Countrywide's business is now selling houses, with half made up of life assurance and the remaining 25 per cent its surveying services.

Mr Hill said that as Countrywide's recently launched conveyancing service increased in profit, the balance of business from the traditional estate agency role of selling homes will fall further.

But despite a slight slowing in last quarter of 1997 Mr Hill said he still saw more growth from the housing market, which has seen prices increase rapidly in certain areas notably London and South-east England over the last 18 months.

"We believe the housing market has still got growth to come," he said, adding that house sales were still below the 18-year average.

Countrywide had seen the average price of houses it sold rise to more than pounds 80,000 in February and Mr Hill predicted it would be above this level for the year as a whole. The average house price in 1997 was up 15.9 per cent to pounds 73,576.

Mr Hill said there would be a much broader based recovery in the market than in 1997, with London and the South East losing some momentum.

"London and the South-east will be a touch less fierce," he said.