It’s that time of year when I delve deep into the annual accounts at Companies House to compare how our colleagues in the industry have been doing and what trends are emerging.
The latest complete post-tax figures are for the year ending December 2022 (unless stated) and reflect a tough year for most, with the growth in house prices slowing, political uncertainty and the mini budget in September 2022 all contributing to the decline in transactions.
Here are my findings:
+ The most startling losses were shown by LSL Property Services, swinging from a £61.9m profit in 2021 to a £64.0m loss. The company restructured to a franchise model in 2023 for its 183 branches, including Reeds Rains and Your Move. With a new focus on mortgages and financial services, it will be interesting to see what happens to its estate agency business.
+ Profits dropped at Connells Countrywide by a staggering 42.5% following the acquisition of Countrywide in March 2021. I do wonder if the Curse of Countrywide is striking again. Surely questions need to be asked by the board at its owners Skipton Building Society, which is mutually owned by all its members?
+ Chianti Holdings Ltd (formed from the merger of Linley & Simpson and Lomond Capital) is showing a £19.8m loss, up from a £15.0m loss in 2021. It paid £15.2m in interest costs and had £91.0m bank loans and £73.2m shareholder loans. The problem with building a business on debt is that it has to be paid back!
+ Andrews and Partners lost £2.9m, on the back of a £2.0m loss the previous year, though it said in its accounts that the Andrews Charitable Trust had set aside sufficient financial resources if needed to operate as a going concern.
+ Leaders Romans, which became part of the Platinum Equity portfolio in February 2022 and ultimate parent company, Hadrian Holding Ltd, is showing £39.4m losses for the 10 months ended 31 December 2022. The company has now been refinanced and shows banking facilities drawn, including interest due, of £304.8m. This high level of debt is surely of concern?
As for the online-only and hybrid agents, they have still yet to prove their model:
+ Yopa lost £6.8m – up by 48% on their £4.6m loss in 2021. Group revenue was down from £18.7m to £17.7m. Its accounts reveal a ‘material uncertainty’ about the company’s future as it’s dependent on shareholder funds – including Daily Mail Group Ventures and Grosvenor Hill Ventures. I wonder how much longer these investors will continue to show their support?
+ EasyProperty was returned to the easyGroup following the collapse of Evolve in August 2022. Meanwhile, Doorsteps went into liquidation in November 2022. Online-only agents continue to follow in the footsteps of Emoov, Tepilo, Hatched, House Network and Purplebricks Version 1! When will they learn?
+ Strike’s accounts for year end March 2023 (which is before its purchase of Purplebricks for £1 in June 2023) are due to be filed by the end of April. As for Purplebricks, how they will survive with the “Strike” free model is beyond me. The model isn’t proven, the City doesn’t like it – and the City is normally right.
Which estate agencies are doing better than most?
+ Foxtons shifted from a £6.2m loss in 2021 to a £9.1m profit in 2022. Guy Gittins was appointed CEO in September 2022 to continue its recovery. Lettings grew by 17% and financial services by 8%, suggesting that its strategy to prioritise growth of its non-cyclical revenue worked.
+ Belvoir Group (franchise) had a record year, with 14% revenue growth, making £7.4m profit, £23k up on the previous year, despite an increase in cost of sales and admin costs. Financial services grew 26%, with its number of advisers up 41 to 284.
+ The Property Franchise Group (which recently merged with Belvoir) also showed a sizeable increase, more than doubling its profit from £3.5m profit to £7.2m. The largest element of revenue growth was a £1.3m increase (to £1.7m) of financial service commissions.
This next selection of agents generated a healthy profit, albeit down on the previous year:
+ Savills made £84.5m profit in 2022, compared to £89.2m the previous year, plus recorded £119.8m group-wide, down 18% from £146.7m. Its balance sheets remain strong.
+ Dexters (to September 2022) made £24.1m profit, down 13% from £27.7m. It saw a 15% increase in lettings revenue and spent £6m on acquisitions. It is now part of the Oakley Capital portfolio.
+ Carter Jonas (to April 2023) made £14.0m compared to £19.0m in 2022, largely because its increase in revenue was offset by an £8.6m increase in admin expenses.
+ Chestertons made an £8.3m profit in 2022, down 12% from £9.4m. It saw a 22% increase in lettings, mostly through rental value increases. Estate agency revenues were down by 3% – faring well compared to a 27% market decline in London transactions.
+ Arun (to September 2022) filed a £7.7m profit – almost on a par with 2020 – but down on its record £20.5m profit in 2021.
+ Kinleigh Folkard & Hayward recorded a £3.6m profit – but down by half because of lower revenues.
+ Winkworth (franchise) settled at £2.0m profit, down from £2.6m. Although estate agency revenue was down 12%, it was offset by a lettings increase of 11%.
+ Chancellors dropped from a £3.0m profit to £423k as the £4.1m revenue reduction was met by only £0.9m reduction in costs.
I’ll report on the 2023 accounts once they are all filed. I’m sure most people found 2023 tough, given the 14 consecutive interest rate rises which inevitably impacted borrowing. Those businesses in our sector who amass large debt to finance their operations will continue to suffer.
However, after two challenging years, we’re now seeing the cyclical upturn, ready for a much-improved 2024.
Paul Smith is executive chairman of Spicerhaart
