Operating losses double at Avison Young

Newly filed accounts for Avison Young show that operating losses across the business more than doubled in the year ended 31 December 2023. Accounts for the UK and European division of the Canadian agent show a stable turnover of £211.1m for the year, down marginally on the £211.8m recorded in 2022. Losses more than doubled, however, with operating losses growing from £41.1m in 2022 to £85.5m last year and pretax losses growing from £55.6m to £101.9m. Revenue from consultancy services dipped from £104m to £96.4m over the period, with transactional revenue down from £43m to £34.6m. Property management revenue increased by 24% to just over £80m. AY said there had been an impairment on its intangible assets during the year of £52.2m, following a review of future expected cash flows. A restructuring of the business in late 2022 and early 2023 enabled it to reduce staffing costs by £11.3m during the period under review to £120.9m. Staff numbers over the year fell from 1,742 to 1,519. AY launched a voluntary redundancy programme in November 2022 as part of plans to reduce costs globally by C$25m (£15.7m). At the year end, Avison Young had a net liability of £143.1m, up from £44.2m in 2022. It said the primary driver for this had been the operating losses suffered. The group said that since the year end challenging market conditions had continued and resulted in a slower than expected recovery. As a result, management reviewed its forecasts in early 2024 and since then had continued to trade and generate income in line with expectations. The leadership of the business said it expected a “gradual recovery” in the UK and European markets from Q4 2024 and that plans from the new government to drive regeneration and new home building would drive “growth and opportunity”. However, it said: “Full recovery will be a gradual process, with strategic initiatives being put in place to mitigate adverse impacts.” AY said it was continuing to review services offerings, streamlining reporting lines and “creating core business focus to drive greater lineage into key markets”. The accounts also revealed that the UK business has some £198m of outstanding debt that it is due to repay its parent company by the end of this year. The debt is expected to be extended for a further 12 months, however. Total loans owed to its Canadian parent total £231m. The Toronto-headquartered AY completed a recapitalisation in March this year, injecting more capital into the business. The firm had defaulted on a $325m (£265m) senior term loan, missing a number of interest payments. Avison Young said that the 2023 filings did not reflect its “successful refinancing” and “our resulting sustainable financial position”.It added: “Throughout 2024 we have continued to plan for a positive and successful future, confident in our commitment to deliver the highest standard of service to clients. This includes building on our significant hires in key areas including living, capital markets and sustainability, and continued commitment to the growth of our business.”Chairman and chief executive Mark Rose said: “AY took early action to address challenges in the market. Our 2024 refinancing provided us with the sustainable financial footing to advance our ability to serve our clients well into the future. We are excited about our prospects as we continue to strengthen our business as the industry recovers.”