Countrywide has set aside an extra £25m to deal with a “substantial” increase in valuation claims from lenders, as it confirms plans to float on the London stock exchange.
In its annual investor report for 2012, published today, the firm confirms the flotation aims to raise £200m.
Countrywide says it has set aside an additional £25m to pay for valuation claims, which it blames on prime lenders submitting claims from 2006 and 2007 before the six-year statute of limitations expires.
The firm first set aside £11.9m in its 2010 results to deal with the deluge of valuation claims, but scaled the pot back to £9.3m in 2011.
It states: “During the latter part of 2012, the group experienced substantially worsening trends in terms of professional indemnity claims received and losses recognised on the insurance bordereaux. As a consequence of this the group has recognised a further exceptional charge of £25.2m.”
The firm says it has considered a potential worsening of claims so that of the £25.2m charge, £15.3m relates to claims not yet received or current claims not assessed by the professional legal advisors due to lack of information.
Countrywide chief financial officer Jim Clarke say there was a “rush” of claim in the second half of 2012 but it is now on the “last lap” of provisions as the six-year rule expires.
He says: “We have tried to be reasonably prudent and conservative and come up with a provision that more than covers the likely impact on the business. We don’t want to continue to have charges coming through each year. We have gone through all the claims and made a provision this year that covers it all.”
The results show Countrywide made a pre-tax profit of £53.7m for the year, 18 per cent higher than the £45.6m pre-tax profits made in 2011.
The firm spent £11.5m in 2012 on restructuring and redundancy costs following a cost-cutting programme, but estimates it will make unrealised gains of £7.9m as a result.
It also spent £400,000 on acquisition costs, bringing its total 2012 exceptional costs to almost £30m.
Countrywide has today appointed Bob Davies as non-executive chairman of the group and Neville Richardson as senior independent non-executive director.
Countrywide was listed until 2007 when it was acquired by private equity group Apollo for £1.1bn. In 2009, Oaktree acquired a majority stake and injected £110m of fresh capital into the business.
Apollo continues to hold a 25 per cent stake and Alchemy’s Special Opportunities Fund has a stake of just under 10 per cent.