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Belfast – A new survey conducted by Duff & Phelps, the world’s premier provider of governance, risk and transparency solutions, in partnership with Trade NI, shows that over one third (35%) of businesses across the retail, hospitality and manufacturing sectors in Northern Ireland believe that their trading and profitability levels will not return to pre-COVID-19 levels until 2022 or beyond. Furthermore, over 50% of respondents indicated they are concerned or very concerned about their performance in the year ahead, with a further 29% saying they are uncertain.
The survey included members of Retail NI, Manufacturing NI and Hospitality Ulster and was conducted in September 2020, prior to the latest COVID-19 restrictions being imposed across the province. The Business Recovery Survey reveals that almost half (48%) of respondents anticipate their employee headcount being lower this time next year, with around two-thirds (65%) claiming that their turnover will be lower.
When asked by how much their employee headcount will change by this time next year, one quarter (25%) of businesses predicted that it would be up to 25% lower, with 17% saying up to 50% lower and 6% saying more than 50% lower. Only 9% of respondents said their headcount would be higher, with 44% saying it would be similar.
Just 12% of respondents predicted that their turnover would be higher this time next year, meanwhile, almost one quarter (23%) estimated that it would remain similar. Of those suggesting that their turnover would reduce over the coming year, 26% said it would be up to 25% lower, whilst 25% said it would be up to 50% lower and 12% claimed it would be more than 50% lower.
Commenting on the results, Davy Elliott from Duff & Phelps said: “It is clear that significant challenges will lie ahead for these businesses across what are among the sectors worst-hit by the coronavirus pandemic. Whilst these results are concerning, it is encouraging to note that respondents are proactively taking steps to protect their businesses and boost recovery efforts in the coming year and beyond.”
While 40% of respondents said they will consider restructuring their business in the next 12 months, 27% said they intend on repurposing or diversifying their product line. Sixteen percent (16%) will endeavor to renegotiate their existing lease terms, while 15% will seek to refinance their business.
“We have been involved in a number of restructuring cases where we’ve completed an independent review of the value of a business and its assets. This has helped guide stakeholder assessment and decision making, particularly where multiple parties are involved, and brought the requisite level of independence and integrity to the process,” Elliott added.
The survey respondents also identified a range of support initiatives they will rely on to help their businesses recover from COVID-19 in the coming year. Over two-thirds (69%) of businesses will call upon government grants or loans, with 51% also relying on employee retention support. Two-fifths (41%) will seek to defer HMRC payments, while one quarter (26%) will seek new or additional bank lending and 37% will focus on marketing and promotional development activity.
The overwhelming response came in relation to rates, with three quarters (75%) of businesses saying they will rely on the rates relief scheme in the coming year.
The Chief Executives of Trade NI, Glyn Roberts, Stephen Kelly and Colin Neill said: “What comes across very clear from the survey of our respective memberships is the vital importance of the rates holiday and the need to extend it further from April 2021. If our economy is to stand any chance of recovery, further rates relief will be needed throughout next year to support our members as we rebuild our shattered economy.”
Anne O’Dwyer, Managing Director and Co-Head of Duff & Phelps Ireland commented: “The survey findings are consistent with what we’ve been seeing in the market over the last six months, whereby businesses have been looking to avail of government support packages to help navigate COVID-19-related financial challenges. On our end, we have been assisting clients with landlord/tenant lease negotiations, refinancing debt terms with borrowers, working capital management, and seeking funding support.”
There are steps that businesses across the retail, hospitality and manufacturing sectors can take in the coming months.
“Whilst it is challenging to accurately forecast trade over the short to medium term given the current flux in the market, having a clear picture of expected cash flows is essential. Trading projections can be flexed as the environment changes but highlighting potential funding gaps or cash constraints will assist businesses as they look to negotiate with stakeholders or apply for additional funding supports,” she said.
About the Survey
About Duff & Phelps
Duff & Phelps is the world’s premier provider of governance, risk and transparency solutions. We work with clients across diverse sectors in the areas of valuation, corporate finance, disputes and investigations, cyber security, claims administration and regulatory compliance. With Kroll, the leading global provider of risk solutions, and Prime Clerk, the leader in complex business services and claims administration, our firm has nearly 4,000 professionals in 25 countries around the world. For more information, visit www.duffandphelps.com.
M&A advisory, capital raising and secondary market advisory services in the United States are provided by Duff & Phelps Securities, LLC. Member FINRA/SIPC. Pagemill Partners is a Division of Duff & Phelps Securities, LLC. M&A advisory, capital raising and secondary market advisory services in the United Kingdom are provided by Duff & Phelps Securities Ltd. (DPSL), which is authorized and regulated by the Financial Conduct Authority. Valuation Advisory Services in India are provided by Duff & Phelps India Private Limited under a category 1 merchant banker license issued by the Securities and Exchange Board.
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