Risk management

As with all businesses, we face a wide range of risks and uncertainties on a daily basis.

Principal risks and uncertainties

The Board has determined the most significant risks to achieving the business objectives, including those that would threaten its business model, future performance, solvency or liquidity. The table opposite summarises these principal risks and how they are managed or mitigated. The risks listed do not comprise all those associated with the Group and are not set out in any order of priority. There could be additional risks and uncertainties that are not presently known to management or currently deemed to be less material, which may also have an adverse effect on the business.

Going concern statement

The ongoing impact of the Covid-19 pandemic has been considered by the Directors in light of the operating resilience demonstrated by the business during 2020, the expectation that most UK Covid-19 restrictions will have been lifted later in 2021 and concerns over the possible long-term impact on the wider economy. The Directors have revised the forecasts for the Group taking into account the potential ongoing impact of Covid-19 on trading over the twelve months from the date of signing the financial statements. Sensitivities have been applied to the base case model to reflect the possibility of an ongoing lockdown scenario with minimal impact on lettings income and moderately lower levels of income from sales and mortgage activity but no reduction in headcount or other overheads and no change in terms of business with franchisees. Under all scenarios, which incorporate the acquisition of Nicholas Humphreys for cash, there is substantial headroom to continue operating within the banking facilities and in compliance with covenants.


Furthermore, a reverse stress test has been carried out against the base case model which demonstrates that, even without changing other parameters such as overheads and dividend payments, it would require a very substantial reduction in revenue, inconsistent with the recurring revenue nature of the business model, for the bank covenants to be breached.


After consideration of these forecasts and making appropriate enquiries, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due.

Potential impact

The medium-term impact of Covid-19 on the economy could have a negative impact on our ability to grow as planned.

Mitigating activities

The risks associated with Covid-19 and its impact on the wider economy are regularly reviewed by the Board and mitigating action is taken wherever possible. Given the Covid-19 risks to our business arise due to extraneous factors, there may be limits to the level of direct action that can be taken. However, the Board will be prioritising the work of our Business Development Managers to support franchisees and advisers in adapting their businesses as necessary.

Potential impact

The ability of the Group to attract new franchisees and advisers with the appropriate expertise and skills, in available and suitable locations, cannot be guaranteed.

Mitigating activities

The Board continually monitors the performance of the recruitment team and is focused on identifying innovative ways of attracting successful new joiners. The recruitment marketing message has been refreshed to ensure that Belvoir attracts the widest possible range of people irrespective of age, gender and race.

Potential impact

The Group’s reputation, in terms of the service it and its franchisees/advisers provide, the way in which it and its franchisees/ advisers conduct their business, and the financial results which they achieve are central to the Group’s future success. Failure by the franchisees/advisers to meet the expectations of their customers may have a material impact on the reputation of the brands within the Group.

Mitigating activities

New joiners are subject to an intensive training programme and subsequent monitoring and support from a dedicated business development mentor. The Group also offers ongoing training courses to ensure continuing professional development.

Potential impact

The Group needs to continue to identify suitable acquisition targets for its franchisees and help to source the necessary funding through its assisted acquisitions programme. The downturn in the property market caused by Covid-19 did impact the appetite of: franchisees to make a portfolio acquisition; funders to support such transactions; and owners to sell their business during unstable trading conditions.

Mitigating activities

The Board will continue to operate the assisted acquisitions programme so as to put our franchisees in the strongest position to capitalise on such opportunities once trading recovers.

Potential impact

The Government has clearly signalled that it intends to professionalise the sector with recommendations made within the RoPA report. This will introduce qualifications for property agents with no “get out” clause for experienced agents, licensing of agents and a new code of practice for the sector.

Mitigating activities

The Board welcomes the proposed changes aimed at professionalising the sector. Our support system already covers in-depth upfront and ongoing training of all our franchisees and financial advisers. We also have a comprehensive system of audit and compliance to ensure best practice.

Potential impact

The market share for online agencies offering a low-cost solution increased to around 10% in 2020 due to traditional agencies being closed for two months. The Group needs to ensure that it can meet the demands of a new generation of landlords, tenants, buyers and sellers for whom a technical platform is second nature, and for whom a physical office presence is less critical.

Mitigating activities

The pandemic accelerated use of technology by both agents and the public. The Group is rolling out a better technology platform aimed at improving the customer journey by giving landlords, tenants, buyers and sellers greater online visibility and interaction.