Profit warnings jump but East fares better than other regions
Seven profit warnings were issued by East of England publicly quoted businesses in the first quarter, more than double the number recorded in the period last year (three) and the highest since 2005 but still the joint-fewest number of any UK region. Stuart Wilkinson, office managing partner at EY in the East of England, said: "The sectors issuing the highest number of profit warnings were those most exposed to the impact of national lockdowns and in many cases were already showing signs of stress. COVID-19 has created new problems, but it has also accelerated existing structural change and exacerbated existing weaknesses. When lockdown lifts, it will undoubtedly ease some pressures, but these underlying issues will remain.”
He added: “No sector has escaped the impact of COVID-19 and across the UK businesses operating in the travel & leisure and retailers have understandably been the hardest hit due to a lack of consumer spend."
“The fact the East of England reported one of the lowest numbers of profit warnings in the UK during the first quarter of the year, reflects the business environment of the region, which features a larger concentration of businesses operating in the private middle market and SMEs. Some of the measures implemented by the government, including the Coronavirus Large Business Interruption Loan Scheme and the COVID-19 Corporate Financing Facility, may go some way to supporting larger businesses through this current. However, regardless of size, businesses will still have had to content with the same challenges, including cashflow and managing employees.” Nationally, 301 profit warnings were issued by UK-listed businesses in the first quarter, almost equal to the total issued in the whole of 2019 and over three quarters of firms cited coronovirus as a reason.The number of profit warnings in the East was on a par with the North East, which also reported seven.
Planning consent granted for four ‘big sheds’ at business park in Bury
Detailed planning consent for a second phase at Suffolk Park in Bury involving four ‘big shed’ warehouse units covering 367,000 sq ft has been secured by developer Jaynic. The 114-acre Suffolk Park development already has outline planning consent for 2 million sq ft of business, distribution and industrial space. The latest consent from West Suffolk Council is for four units of 37,000 sq ft, 80,000 sq ft, 100,000 sq ft and 150,000 sq ft. The first phase at the park involved two units - the first speculative warehouses in the region in a decade - of which one 147,000 sq ft building was let to Unipart last summer. Detailed negotiations with occupiers are underway on the second 206,000 sq ft unit. Ben Oughton, Jaynic development director, said: “Despite the current health crisis there is strong evidence that there is still significant demand for well-located logistics warehouses. We felt that as the first phase is proving successful with Unipart taking the first unit and the current strong demand for the second unit the time was right to go ahead with a further second phase of speculative units.”
Region's land prices stable but market activity set to slow
Development land prices in the East of England have remained stable in the first quarter andwhilst many existing deals are progressing the pandemic will lead to a slowdown in market activity, according to Savills. The property agency said greenfield site values in the region were level in the first quarter, making an annual rise of 4.6 per cent. Brownfield land prices fell by 0.5 per cent but were still up 2.7 per cent over the year. Savills’ development teams in the East – which includes offices in Chelmsford, Norwich and Cambridge – acted on £113.2m worth of land deals during the first quarter, involving just over 950 housing plots on nine sites. Key deals included the sale of 91 acres of land at Panshanger Aerodrome, in Welwyn Garden City for Mariposa Investments to Homes England with space for 815 homes. Savills Norwich sold a near-four acre site in the city’s Barrack Lane with planning permission for 200 homes. Richard Janes, development director at Savills in Cambridge, said: “The disruption brought about by Covid-19 has slowed - but not entirely stopped - transactions. Existing land deals are largely proceeding, just with some delays in completion date. The residential development land market in particular has not seen the same immediate impact as it is based on longer time horizons.”
Business confidence touches record low but demand expected to come back later in year
Business confidence has seen its largest quarterly fall on record and coporate revenues in 2020 are set to come in some 22 per cent below the level firms were expecting before the Covid-19 crisis, according to a survey of chief finance officers (CFOs) at FTSE 100 and 250 companies by Deloitte. Although revenues are expected to pick up in the second half, no quick snap back is expected. In the first quarter survey, some 84 per cent of CFOs said that they are less optimistic about their company's prospects than three months ago. The virus is also taking a heavy toll on economic activity and some 94 per cent of CFOs say they are unwilling to take risk onto their balance sheets. Meanwhile, large firms reported the sharpest squeeze in credit conditions on record, with a marked deterioration in the availability and cost of debt in the last three months. Almost all CFOs expect UK corporates to cut capital expenditure in the next 12 months. Paul Schofield (right), Deloitte South East practice senior partner and Cambridge office senior partner, said: “Finance leaders are facing the toughest challenges in decades. This is a time where strong and proactive management is all the more important and I have seen, in several regional business meetings that we have strong leadership in the region. Most expect demand to start to come back this year and are already thinking beyond the downturn and how to adapt and prosper in a changed world. Almost all finance leaders believe that flexible working will gain ground in the wake of this crisis. We have an opportunity to re-think the future of work in a way that boosts opportunity and innovation.”
Fall in insolvencies could be a 'red herring'
A surprise 8.5 per cent fall in the number of corporate insolvencies in the first quarter of 2020 may have been partly due to trouble in processing cases and could be a ‘red herring’, the Eastern branch of the sector’s trade body R3 has warned. Insolvency Service figures for England and Wales show that underlying corporate insolvencies in the first quarter also fell by 8.5 per cent on the previous three months. R3 Eastern committee member Alistair Bacon of AMB Law (right) said: “The quarterly and year-on-year decreases in corporate insolvency numbers is highly unusual given the circumstances and climate, and such decreases are very unlikely to last. The impact of the coronavirus on every aspect of the business world is hard to overstate, and almost all companies, from multinationals to microbusinesses, have been affected.
“Given the role of the courts in some corporate insolvency processes, as the Insolvency Service notes, these latest statistics may well have been artificially suppressed, to a degree, due to the curtailment of normal working hours by the courts. We may well see a backlog of cases coming through in future releases.”
Suffolk businesses finding new ways of working
Suffolk businesses are adapting to the pandemic and finding new ways of working although they would welcome greater flexibility on furloughing, according to the latest chamber survey. Around 79 per cent of businesses are now working flexibly and with 70 per cent of firms furloughing, many would like to see greater flexibility in the Coronavirus Job Retention Scheme to allow for staff to be furloughed part-time. With cash now reaching businesses in the form of local authority grants, and the Coronavirus Business Interruption Loan Scheme, the number of firms reporting cash flow concerns has fallen for a third week running to 82 per cent. Only a third of firms are worried that their business would close if social distancing continues. Koyas Miah, trade business adviser at Suffolk Chamber, said: “These are incredibly difficult times, but Suffolk businesses are showing a remarkable resilience in how they are adapting to new ways of working.”
Property agency wins award for second year running
Property agency Fenn Wright has won the Estates Gazette award for Most Active Agent in Essex, for the second year in a row. The team won the award for completing the highest number of sales, lettings and acquisitions in Essex during 2019. For the second year running , James Wright, associate partner at Fenn Wright, has been named ‘Dealmaker of the Year’, completing more transactions than any other commercial agent in Essex in the last year. Lewis Chambers (photo, far right), partner and head of commercial, said: “To be accredited as ‘Most Active Commercial Property Agent in Essex’ by the prestigious Estates Gazette, is a fantastic accolade. The tenacity and professionalism of our agency team enables us to conclude more deals than our competitors and makes us the ‘go-to’ agency for advice on leasing and selling commercial property."
“Congratulations to James Wright (photo, near right) based in our Chelmsford office, who has been named ‘Dealmaker of the Year’ for the second year in a row. Our team know which companies are looking to relocate or expand and this, alongside our unrivalled local knowledge, makes for a winning formula”
Milestone reached as work continues on offshore windfarm
Work on the £2.5 billion East Anglia ONE offshore windfarm being built almost 30 miles off the Suffolk coast has continued during the lockdown and all 306 turbines have been installed ahead of the project’s completion. Since last June, some 102 of the turbines have been installed having been pre-assembled and loaded from Peel Ports Great Yarmouth, where ScottishPower Renewables’ has made a £5 million co-investment. Siemens Gamesa – which made all of the 75 metre turbine blades at its plant in Hull – employed various local firms at Peel Ports including Lowestoft-based Delpro Wind and Gt Yarmouth-based CLS Global Solutions. Charlie Jordan, East Anglia ONE project director, said: “Successful installation of all the turbines is a tremendous achievement... It brings us another step closer to completion when the windfarm will be producing the clean, renewable energy the UK needs to decarbonise and meet its pledge to reach net-zero by 2050. This project is testament to the leading role East Anglia is playing in offshore wind and is delivering tangible benefits for its people, businesses and communities – including the creation of more than 800 jobs and spending over £70 million with companies across the region.” East Anglia ONE is a joint venture between ScottishPower Renewables and Macquarie’s Green Investment Group and the first of four offshore windfarms the company is developing in the region. The windfarm is already producing energy and when fully operational it will generate 714MW annually – enough to power more than 630,000 homes.
Entrepreneurial business takes stake in Suffolk digital agency
Shout About Suffolk, a business launched last year to house and support start-up companies, is taking a 50 per cent stake in a digital agency, Infotex, based at Melton near Woodbridge. Infotex has over 20 years’ experience and has worked with Shout About Suffolk’s members, by creating websites, apps and digital strategies for several early-stage businesses. Shout About Suffolk founder Paddy Bishopp (right) said: “We have long shared a great relationship with Infotex and know that thanks to their commitment and dedicated team, they will be able to help more Suffolk businesses achieve local, but perhaps global recognition too.” Based at Riduna Park in Woodbridge, Shout About Suffolk plans to house 6-8 start-ups and support them through initial funding with and access to a start-up loan and a three-year mentoring and business support programme.
Infotex MD Ant Agar said: “This commitment to Infotex by Shout About Suffolk is a tremendous boost, during a difficult time for all of the business community.”
Innovative lease at Essex golf club sees course and clubhouse run separately
A new 25-year lease with an innovative structure has been agreed at Warley Park Golf Club in Brentwood under which the clubhouse and golf course are to be operated by separate organisations. Set across almost 160 acres, the club (right) generated significant interest when it was put on the market by Savills for a private client in January. Built in 1976 as an 18 hole course, it was extended to the current 27 hole layout two years later and it also has practice facilities and a 10,000 sq ft purpose-built clubhouse. An innovative lease structure means the clubhouse will be operated by Zayyaan Ltd and the golf course will be operated by Get Golfing CIO, a charity which aims to improve physical and mental health. Ian Simpson, director in the leisure and trade team at Savills, said: “This is a landmark letting for two reasons. First, it is rare for a mature golf course business to be offered to let on the open market and secondly it is the first letting to combine two complementary business operations in the lease arrangements from the outset. That the lease completed within a few weeks of terms being agreed is a testament to the collaborative nature of the parties involved, and promises a successful future for Warley Park Golf course.”
