Companies large and small are battening down the hatches to weather the Covid-19 storm.
Purplebricks announced cost-cutting measures aimed at safeguarding its business and making best use of it £35m cash reserves. The company statement read that:
“Given the market uncertainty, the Company has taken immediate and significant measures to preserve cash and implement a lean operating model through this period. Purplebricks has undertaken a cost base assessment and has instituted a number of cost-saving measures, including reducing supplier costs and overheads. All TV and radio advertising has been suspended and online marketing costs have significantly reduced. The Company also be using the Government’s COVID-19 Job Retention Scheme and are currently assessing how to implement.”
In an update to the City, LSL Property Services PLC reported that after a healthy start to 2020 the company is experiencing rapid changes in the market. As a result it is taking action to sustain the business and will not recommend a final dividend payment for 2019.
“We last updated the market on 10th March 2020 in our 2019 Preliminary Results Announcement, when we communicated that we had seen some slight softening of our lead sales indicators in Estate Agency. Since then, we have seen a further material slow-down of our lead sales indicators in Estate Agency, and following the Prime Minister’s address to the UK, announcing a national lock-down with effect from the evening of 23rd March 2020, activity levels have dropped very sharply.”
“In response to the sharp drop in transaction volumes, we are taking a wide range of immediate and proactive measures to reduce operational costs, optimise the balance sheet, provide operational flexibility and protect our employees, customers and business partners. Key actions include the following:
Group wide
· Implemented business continuity plans across all our businesses, switching to remote working
· Proactive measures across our Estate Agency, Financial Services and Surveying businesses, further details below
· Rightsizing of team activity levels to market conditions, reflecting the drop in transaction volumes by business stream
· Recruitment freeze and annual pay review suspended for the Board and all staff
· Deferred all non-critical capex
· All discretionary expenditure halted, with all non-essential marketing activities cancelled
· All Group wide acquisition activity halted for the foreseeable future
· Working closely with our business partners, with the intention of finding solutions to meet their needs in this rapidly changing environment
Estate Agency
· To protect our employees, customers and suppliers, closure of all Estate Agency branches, in line with Government advice, with customer support provided remotely, and with Estate Agency branch staff working from home where required
· Cross-functional training to enhance workforce flexibility
Financial Services
· Continue to provide consistent delivery of appropriate outcomes for consumers
· Meet anticipated increased consumer demand for remortgage and protection products
Surveying
· To protect customers and staff, cessation of all physical valuations in line with Government advice
· Actively working with lender clients to move a higher proportion of valuations to non-physical (remote) valuations
Belvoir Group PLC announced it final results for the year ending 31st December 2019 and posted a 43% increase in revenue – £19.3m, up from £13.4m in 2018.
Profit before tax was £5.6m (£5.5m in 2018 which included an exceptional credit of £0.6m).
The Group ended the year with a stronger balance sheet showing cash of £3.6m, double that of 2018.
Dorian Gonsalves, CEO of the Belvoir Group commented:
“Whilst 2020 will be adversely affected during the period of economic inactivity due to Covid-19, the Group has achieved a very good set of results for 2019, with outstanding revenue performance, having overcome the twin challenges of the tenant fee ban and the economic and political uncertainty surrounding Brexit.
Looking at the year ahead, trading was strong and in line with management expectation in the first two months of the year, and the recurring nature of our lettings revenue gives the Group a high degree of resilience.
The Board has acted swiftly in response to Covid-19 to put in place measures for the Group and for our franchisees, to enable us collectively to mitigate some of the short-term downturn in revenue.
Notwithstanding these measures, Covid-19 is expected to have a significant impact on trading in 2020 and therefore the Board has prudently decided against proposing a final dividend for 2019.
It is difficult to predict exactly how long this impact will continue, but the Board is confident that the Group has a strong balance sheet with adequate resources to weather the storm, and to operate within its bank covenants for the foreseeable future.
We believe that in operating a franchise model, we have both the agility and capability to emerge from the crisis in a good position to capitalise on future opportunities within the sector, and return to growth and winning market share.”
What steps is your business taking to be able to get through the coming weeks? Drop a line to EYE. news@propertyindustryeye.com
Comments (15)
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Good to hear that PB are utilising Government grants, unlike Belvoir who have laid off hard working, loyal employees without any support. COVID-19 has revealed their true ethos
Are they really using grants or a bit of both? You’re in cuckoo land if you think it’s 100% grants.
They are saying that but they sacked people from the call centre last week.
I knew Purplebricks would spin off Covid-19 to have a response to their future collapse. Why did they sack a load of people in the call centre last week? That doesn’t sound like furlough.
They planned this from last year, they want buyers and sellers to be online only, letting go of the hybrid part sacking off key agents who made a difference. No virus is an excuse for their poor play on management. This is an exit strategy all day long.
I’m sure a lot of companies and not only in our sector will use coronavirus as an excuse for poor results. Same happened with Brexit. I don’t think furlough will be paid by the tax man if a business or call centre has closed down and in genuine redundancy cases. If it is paid, it’ll be clawed back.
A number of people contacting us are already talking about moving out of the city to a more physically and emotionally sustainable lifestyle in the provinces. This crisis is fast making people realise where their priorities in life lie with “loads a money” dropping down the scale fast and home working becoming a norm meaning that access to the Big Smoke will not be as necessary as it was. More people are likely to take early retirement to enjoy life and more younger people will looking to live and work in more relaxing and environmentally friendly communities where there is more opportunity for them to set up their own, smaller niche businesses. Of course, pressure to clean up our cities quickly when people will have had a few months living with clean air and peace and quiet and experiencing what they have been missing might negate this. Whatever happens, the housing market and our businesses will never be the same again with new opportunities opening up for all of us.
It almost the case the larger the agency in this scenario at least the worse it will be-short term at least. I would be amazed if we didn’t see the larger companies close a lot more of the marginal branches down and transfer stock to the more successful ,larger market places.
Time for a lot of brave decisions.
PB is an interesting one. If you have paid upfront for a service and the agent cant provide that service-performance – at any time-can I ask for my money back ?
Belvoir is a decent result to be fair IMO
Thanks for the insight Tim.
Is that the official, ever eloquent, response from your company?
Thanks. Its my own personal opinion as are the majority of comments in this forum.But it sort of makes sense and I think a few people, not all, agree with me. I guess time will tell.
Check in in 6 months
Tom
On a light hearted note during these troubled times. The furloughed staff at CWD will no doubt have been heartened to see that the BODS have finally taken the decision to ‘ halt their Groupwide acquisition for the foreseeable future ‘ thank goodness for that. Coz it ain’t been helping so far!
Either that or it’ll come back like a wrecking ball, releasing all the pent up energy of lock down, who knows? ( stupid emoji shrugging bird )
The property market in my opinion will struggle to bounce back quickly.
There will be many estate agency offices which will not re-open, most of these agencies were on the edge pre covid.
This will be similar in other industries and will probably take a of number of years to recover.
After the last 4 years I think this will undoubtedly finish off more agencies. I think the market will come round quick enough, but it’ll still be too late for many.
For 3 years I have been tracking and reporting that about 6000 agents had a register that did not support their portal spend, this world event changes housing and with it our industry.
I have modelled the numbers, the industry as was could withstand a 10% fall in transactions – 15 % for those without a heavy portal spend. That’s equivalent to 1 -1.5 months of no completions. It is not hard to see that happening right now.
the implication go well beyond agency, the suppliers particularly the CRM suppliers could be hit hard by furloughed staff not requiring licences for several months to come.
As an industry there is a need for a strategic plan to see the uncoordinated, independent, 80% of the industry are supported as well as the PLC’s