Foxtons Group plc (FOXT) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Foxtons interim results presentation. Today's conference is being recorded. At this time, I would like to turn the conference over to Nic Budden, Chief Executive Officer. Please go ahead, sir.

Thanks so much. Good morning, everyone, and thank you for joining us for our 2020 half year results presentation. Today, I'm joined by Richard Harris, our CFO; and Patrick Franco, our COO in our head office here in Chiswick; and a number of our other senior team members. So there will be opportunities for Q&A later on. I'll begin this morning by providing an overview of H1 performance and our response to COVID-19, and then bring you right up-to-date on what we're seeing in our markets as of Friday last week. Richard then is going to get into the detail around our financial results, and I'll return at the end of the session with an update on our strategy, core positioning and some thoughts on outlook for the remainder of the year. So turning to Slide 4. Let's start with a summary of financial performance for the first half of 2020. As you'd expect, COVID-19 and the associated measures implemented by the government to control the spread of the virus, which meant that property markets were significantly constrained during much of the usual busy spring period, did have an impact on our business during H1. However, I think you'll see throughout the session this morning that the strong operational response across the group, together with improving sentiment within our core markets since the lockdown has eased, has enabled us to considerably mitigate the impact of the disruption on our profitability. In particular, despite the physical closure of our branches from the 23rd of March through to the end of May, and the restrictions of the coronavirus built on our working practices, the hard work of our brilliant employees and the flexibility of our centralized business model and technology applications did enable us to deliver essential services to customers throughout the disruption. As a result, revenues were more robust than expected during lockdown. We were able to get the business back up and running quickly as restrictions were eased, and we were able to take swift actions on cost to protect profitability as far as possible. Lettings revenue was down 21% to GBP 25.7 million of resilient performance, with lower new revenues during lockdown, partially mitigated by a strong recovery in June and by good renewal revenues which have largely been unaffected by the pandemic. Sales revenue fell 28% to GBP 11.1 million, with strong growth during the first 11 weeks of the year being reversed during lockdown when the sales market was essentially closed to new business and sales commissions was almost exclusively the result of offers agreed prior to lockdown moving through the pipeline to exchange. Mortgage broking was down by just 9% at GBP 3.6 million over the 6-month period, thanks to high levels of remortgage business offsetting very limited new mortgage underwriting during the pandemic. As soon as it became clear that COVID-19 would have such a major impact on property markets, we took firm and swift actions on cost to reduce cash outflow and protect profits, all the while focusing on the safety of our employees and customers by creating COVID-19 secure workplaces and service delivery processes so that we could make the best of what was clearly going to be a difficult period. As you'll be aware, early in the lockdown, we made a successful equity placing to strengthen the group's balance sheet, both to protect against future risk and uncertainty and to give us the funds to take advantage of suitable investment opportunities that might arise as markets recover and stabilize. We're very grateful with the continued support of our shareholders, and I'll bring you up to speed later on with some more details about our investment program. Turning to Slide 5. Let me summarize our priorities over the last 4 months. And whilst these have largely been driven by the need to deal with the pandemic, we did challenge ourselves early to continue to deliver key strategic programs where we could do so safely. During the lockdown itself, we set ourselves 3 very clear priorities. Our first and overriding priority was to protect the safety of employees and customers. This has remained our focus throughout the crisis. And ahead of reopening our branches, we completed a thorough independent risk assessment for each of our branches and our headquarters to ensure that all of our sites were COVID safe. All branches have now reopened. We have the majority of our people back at work, and fiscal viewings and valuations are taking place under tightly controlled conditions. We've also created a COVID-19 Employee Committee, and that group regularly reviews our procedures in the light of changes in government policy and our own learning to ensure that we maintain best practice internally. Our second priority was to ensure that we were delivering the best possible service to our customers when they needed us most, and the critical success factor here was a combination of the focused dedication of our people, together with the flexibility and adaptability of our technology systems and centralized operations. These key elements of our business model enabled the core team of about 300 people to work safely, securely and efficiently from home to provide essential support to customers and drive revenues where possible. Having a core team connected through Agile systems in this way delivered real advantage for us and our customers. And during lockdown, we processed over 4,000 property management work orders for essential repairs to keep tenants safe. Using our online web application, we're able to renew 90% of expiring tenancies to protect and secure the rights of our tenants and landlords and maintain renewal commissions. We negotiated over a 1,300 temporary rent agreements and holidays between tenants and landlords, where tenants were having financial difficulty. And we supported over 1,000 essential house moves for authorizing key workers and at-risk groups, ensuring that their moves took place safely and within government guidelines. In sales, we supported ongoing essential transactions and conducted over 2,500 virtual viewings, alongside a number of online auctions using our virtual auction platform. This enabled us to maintain close relationships with vendors and buyers, which let us build our pipeline quickly when markets reopened. As I mentioned earlier, one of the advantages of being able to adapt core business operations to the COVID-19 environment quickly, was that we were able to continue to develop and deliver strategic programs throughout the disruption. Key technology achievements during H1 include the rollout of further web applications, such as integrated electronic referencing that speeds up tenant onboarding and creates new revenue opportunities and the implementation of a customer data platform that will go live in Q4 to support next-generation marketing programs and lead management using AI and machine learning principles. We've also taken forward our letting strategy. We are currently in well advanced discussions on several high-quality lettings book acquisitions, which we believe are a good fit for us, and we've continued to build our proposition in Build to Rent. We were successful in winning a number of large accounts during the lockdown. And today, we have the largest number of Build to Rent instructions that we've ever had. Moving on to a quick update on our key product markets. You may recall from our Q1 trading update that overall commissions during the first 3 weeks following lockdown were 47% down in the same period the year before. As you've seen from the financial summary this morning, we made steady improving progress throughout the remainder of the first half. And Richard is going to get into more detail around the phasing of our revenues in a moment, but let me pull out several key themes on lettings and sales on Slides 6 and 7. And to give you as much update information as possible, we've included information and data where we can up to Friday last week. You can see from the chart that just prior to lockdown, we saw a surge in landlords bringing properties to market. And at the same time, we saw new applicant registrations fall off as prospective tenants naturally pause to consider their options. The result in excess supply unsurprisingly led to rents falling by about 11% on average during lockdown. Of course, the coronavirus bill placed significant restrictions on our ability to let new properties during lockdown and, therefore, commissions from new transactional activity was heavily constrained during that period. Our lettings revenues are somewhat underpinned by renewals and property management fees, however, and these nontransactional elements of our business held up well and helped partially alleviate the impact of COVID-19 on overall lettings revenue. And Richard will explain a little bit more about the relationship between our transaction and nontransactional revenues a little later. Thankfully, only a small number of our tenants is around 7% required intervention to support tenants in financial distress. And our lettings team have been doing an excellent job helping those more vulnerable tenants get through what has been a difficult and anxious time for them. And it's worth mentioning here that the vast majority of our landlords have shown real compassion and support during these difficult times, with many and most of them agreeing generous rent holidays or even rent-free periods. Since the easing of lockdown, we've seen good growth in lettings and applicants and listings, and revenues have now returned to pre-lockdown levels. Of course, we are now in our busiest period of the year for lettings, and we'll need to work hard to match last year's revenues in Q3 and Q4, particularly as rents remain around 5% down. But we do have a strong team back at work, significantly higher levels of stock than this time last year and plenty of applicants to work with. So I'm cautiously confident about short-term lettings revenues. Moving to Slide 7, let's go sales. As I've indicated before, the sales market was showing strong momentum over the first 10 weeks of the year following the general election result in December. In particular, during February and March, forward indicators such as applicant registrations, viewings and our sales pipeline were all running between 20% and 30% up on prior year. During the lockdown, we adhered rigorously to the government safety measures, meaning that the majority of sales transactions temporarily were put on hold, and we were unable to conduct physical viewings and valuations. As I mentioned earlier, our systems did allow us to very effectively conduct virtual views and valuations and convert a reasonable number of offers in our pipeline through to exchange. But unsurprisingly, our pipeline did feel the impact of very low numbers of new offers in the absence of a properly functioning sales market during much of the second quarter. However, having kept in close contact with customers on a regular basis during the lockdown, we opened all our branches and our headquarters on the 1st of June. And as you can see, there was a relatively immediate response with sales applicant registrations and instructions responding rapidly. Today, we have a similar number of sales instructions compared with last year and slightly higher numbers of new applicants. And all things being equal, I would expect that excess demand to lead to reasonably stable prices in the second half. And this activity at the top of our sales funnel is feeding through to our under offer pipeline, and you can see we're matching our pipeline today with where it was a year ago. And whilst there will be a lag as offers that are relatively immature mature into exchanges, we can look forward to better commissions later on in Q3. But that gives you a roundup of our performance and how the markets are behaving at the moment. I'll hand over to Richard now, who will provide some more detail on our financials, and I'll come back to wrap up with strategy and outlook.

Thanks, Nic, and good morning, everyone. An eventful first half of the year, so I'll do my best to give you some insight into the detail behind Foxton's financial performance in this section. Starting off on Slide 9. You can see total revenue declined by 22% or GBP 11.4 million across the group, largely driven by the impact of COVID-19 and the associated restrictions on movement. We'll go through the component parts of the revenue decline in the next slide. When it became apparent that COVID-19 was going to have a significant impact on the residential market in London, we looked to take swift and decisive action to realign the cost base to reflect the increased uncertainty and expected declines in revenue. As a result, we were able to reduce operating costs by GBP 10 million compared to the first half of last year. That was partly driven by the support put in place by the government in the form of CJRS and rates relief, and I'll take you through the breakdown of cost reductions in a moment as well. As a result of the realignment of the cost base, the business was able to limit the impact on profitability to an operating loss of GBP 2.4 million, which is GBP 1.5 million adverse to the same period last year. Adjusted items of GBP 0.8 million were charged in the period, relating to a branch impairment charge and a true-up on costs relating to prior year branch closures. Finally, the statutory loss before tax in the year was GBP 4.3 million and after tax was GBP 5.4 million. On Slide 10, as you can see from the chart on the left-hand side, revenues building nicely as we went through the first quarter of the year, particularly in sales with improved sentiment following the conservative election at the end of 2019 had resulted in increased commission pipeline that was starting to flow through into revenues. You can then see the significant impact that the lockdown had on revenues in April and May. On the bottom left-hand side, transactional revenues, that is sales exchanges, new tenancies and lettings and new mortgages were heavily impacted, down 33%. We were pleased to say overall revenues were relatively resilient, supported by recurring revenues from renewals, property management services and remortgages. You can see that revenue in June started to recover following the reopening of our branches on the 1st of the month, having made the necessary adjustments to our office environments and processes. On the cost side, as we've discussed previously, we have a relatively fixed cost base in normal circumstances. However, the support to our employees by the furlough scheme and rates relief that the company benefited from, combined with the swift action to reduce all discretionary expenditure, that we were able to reduce our cost base quite considerably. Within the GBP 10 million reduction, GBP 3.8 million related to the pass-through of wages claimed under the CJRS to employees and GBP 1 million related to the combined effect of rates relief and business interruption grants to GBP 4.8 million in total. We furloughed 750 employees within a few days of lockdown, and the vast majority of these remained on furlough through to the end of May. We started June with just over 400 employees on furlough, and have actually been brought back to work as the weeks have progressed. As of today, we have more than 85% of all employees working, with around 150 remaining on furlough. We'll continue to manage staffing levels in line with business activity in the second half of the year. With regard to the other cost savings, the largest component to the 20% pay reductions for all directors and the vast majority of employees, reduction in employee commissions as a result of lower revenues and reduced marketing expenditure. All discretionary expenditure was reduced to the bare minimum in the period, and where possible, we renegotiated contracts with certain suppliers. We'll maintain this approach into the second half of the year, which will result in further cost savings. Moving on to lettings on Slide 11. Total revenues declined by 21% in the first half, a reduction of 5% in Q1 and 34% in Q2. Across the first half, volumes were down 14%. As we've mentioned previously, new deals and lettings were significantly reduced by the impact of COVID-19. Recurring revenues from renewals and property management services protected the impact on total revenues to a certain extent. Revenue per transaction was down 8%, driven by the reduction in average rents that Nic has already mentioned. Average rents were down 10% in April, 12% in May, and then started to recover to be 6% down in June. On the right-hand side of this slide, you can see the monthly revenue performance of the business since restrictions on movement took effect. Revenues were down 39% in April, 45% in May. Since we reopened our branches, revenues declined by 12% in June and further improvement to be down 3% in July. Within the July position, a number of long let deals actually grew in the period, and it was a small decline in average rents and significantly fewer short let deals that drove the reduction. It's worth mentioning the impact of the tenant fee ban in the first 5 months of the year was GBP 1.4 million. And as we've now come up again, the anniversary of the ban on the 1st of June, the full year impact was GBP 4.1 million. Turning to look at contribution. This one held up relatively well in the period as we were able to reduce our direct costs through the use of the furlough scheme. Contribution margin was 72% versus 73% in the first half of last year. Looking forward, we're well set up for the busy summer season in lettings, which has already started to ramp up. Stock levels are considerably higher than last year. Applicant levels are strong. We have a motivated workforce, and overall staffing levels are being managed tightly. The performance in July gives us some confidence that the market and our business is recovering relatively quickly in lettings. One area of uncertainty at this stage, how strong the market will be for students, particularly overseas students in London and corporate relocations. Unsurprisingly, initial indications of these markets and the summer short let market will not be as strong as they have been in prior years. Turning to look at sales on Slide 12. Sales revenues were flat during Q1 at GBP 7.1 million, with strong demand in the first quarter of the year starting to feed through to revenues. During Q2, sales revenues declined by 53%, taking the first half position to be 28% down in aggregate, and all of this reduction was driven by the reduction in volumes. Despite this, the vast majority of exchanges in April and May, and to a certain extent, June on deals that have gone into the sales commission pipeline in the first quarter. Contribution margin in the first half was 44%, down from 51% in the first 6 months of last year. Once we were able to offset the rent costs by GBP 1.3 million, this wasn't enough to fully offset lost revenues. You can see on the right-hand side that revenues are gradually improving. The sales commission pipeline is now in line with prior year, so we expect this continued improvement in the second half. Stock levels are sufficient, in line with last year, and applicant demand was positive even before the changes announced to stamp duty, which is likely to further support sales activity over the course of the next 9 months. I'll turn the ball on Slide 13 to our mortgage broking business. Revenue here held up relatively well during the first half, being only 9% down. Within this, volumes were down 2%, as the number of remortgages largely offset the significant decline in new mortgages. The revenue per transaction was down 8%, and this was also linked to the same mix effect, with remortgages typically attracting a lower fee. Asset sales and majority of new mortgage revenues in April and May were supported by transactions that commenced prior to the lockdown. The real impact of the lockdown can be seen in June revenues, which reflect the fact that new mortgage underwriting was temporarily suspended during the lockdown period. It was pleasing to see revenue performance, however, has improved in July, down 2%, again, supported by remortgage activity. New mortgage activity in the second half of the year started to improve. We think Alexander Hall is particularly well placed to capitalize on this improvement, especially when you consider that professional mortgage advice is even more valuable when there is increased complexity and uncertainty. A few things to point out on Slide 14 on the balance sheet. So our cash balance at the end of June was GBP 45.5 million, and we need to top off the RCF that was fully drawn at the balance sheet date. The net cash position was GBP 40.5 million. The increase from last year-end was mainly due to the equity placing in April, which generated GBP 21.1 million of net proceeds. The cash balance at the end of the period benefited from GBP 3.5 million of VAT liabilities that were due between March and June 2020, and these can be deferred to March 2021 per the government's VAT relief. In addition, there are a total of GBP 4.3 million liabilities relating to lease payments that were due between March 2020 and June 2020. This amount will start to be repaid in the second half of the year, and the repayments will continue for a period of around 18 months. You may note from our previous update that at one point, we temporarily deferred to pay our national insurance payments, but these were fully paid in full in the first half of the year. Subsequent to the end of the first half, the RCF has been fully repaid in July. We'll retain access to that facility in the future should we need to utilize it. With GBP 40.5 million of net cash, we retain good liquidity and have flexibility to support the business with investment for the long term, whilst also protecting against any further periods of disruption should they arise. Slide 15 on the cash flow. I've touched on a few of these points already, but to summarize, the net free cash flow in the period improved by GBP 5.7 million, and this benefited from both the deferral of VAT and lease payments I've just mentioned. Stripping out the impact of the capital raise, repayment of the RCF and the abnormal creditors at the end of the period, cash flow in the second quarter of the year was broadly neutral. Net spend on the acquisition of London Stone was GBP 1.9 million. London Stone is a high quality, predominantly let engagement in South East London, and we completed the deal at the end of February. Progress to date, it has been pleasing. We'll remain focused on managing cash tightly over the coming months, but also look to continue to prioritize investments in the business. On Slide 16, it's worth reiterating our capital allocation policy. At the time of the placing in April, we highlighted that the net proceeds will be used to repay RCF in full, and to provide sufficient liquidity and flexibility to support the business through the anticipated disruption from COVID-19. To date, we've been able to navigate the lockdown period and the subsequent opening up of the housing market with minimal impact on cash flow. That said, it's unclear how the pandemic will continue to affect the residential sales and lettings markets in London, and it's important to retain sufficient liquidity to manage through this uncertainty. Beyond working capital need, we intend to use our cash to continue to fund investment in the organic development of the business, both people and technology and to prioritize lettings book acquisitions. We've seen strong performance from the London Stone acquisition, with lettings revenue growing by 3% in the 4 months of our ownership, despite the impact of COVID-19. This gives us confidence to further -- make further similar investments, which we believe will generate strong returns on investment and healthy payback periods. We expect London Stone to pay back within 3 years. In addition, the recurring nature of revenue from lettings books further improves the group's resilience due to fluctuations in the residential sales market. Moving to dividends. The group's core dividend policy remains to return 35% to 40% of profit after tax to shareholders as an ordinary dividend. In the first half of the year, the group made a loss after tax and, therefore, no dividend will be paid. Should sufficiently attractive lettings acquisition did not emerge, although they are a priority over the next 12 months, we would then consider returning excess cash to shareholders. Finally, to summarize on Slide 17. I won't get to the whole slide here, but the key points are financial performance of the business has been relatively resilient through the lockdown period, supported by the recurring nature of revenues in lettings and mortgage broking and our ability to utilize our best-in-class technology, whilst working remotely. We took this action to realign the cost base in the first half. We've started the second half of the year with around 150 employees on furlough, so our contribution from the CJRS in the second half will be significantly less. However, we will continue to benefit from rates relief, and we'll get into our costs tightly managed. We're in a strong financial position, with sufficient liquidity and the flexibility to invest in the business for the very long term. And as a reminder, our centralized operating model means we benefit disproportionately from any improvements in the sales market. I'll now hand back to Nic for the strategic update and outlook.

Thank you, Richard. Yes, let me just touch on strategy and outlook in the context of the first half. The last 4 months of the year have been a real challenge, there's no doubt about that, for so many of us, for so many different reasons. Our businesses, our friends, our families all face some anxious and uncertain moments. But I hope you can see from today's results that whilst our revenues have inevitably been impacted by the disruption of the virus, we have weathered the storm relatively well at Foxtons. And for me, that comes down to the competitive advantage inherent in our business model. We've always recognized that our people are key to the success of our business, and never has this been more apparent than during the pandemic. I'm extremely proud of the exceptional service and efforts that our people have been making to deliver for customers right across the business during these unprecedented times. Being there for our customers when they need us most is a big part of our culture, and our people have certainly delivered on that. And I'm hopeful that the tough times we've shared with our customers will bring us closer and deepen our relationships with them for the longer term. The pandemic also demonstrated the huge value of our technology systems. Within 48 hours of lockdown, we had implemented our COVID-19 contingency plans with a core team working from home, supported by a single IT system and customer database that underpins every key aspect of our service delivery. And because those systems are integrated with our IVR telephone systems and web applications, customers could self-service when they wanted to as well. And they certainly did so with the usage of our My Foxtons portal up 85% over the lockdown period. The adaptability of our technology allowed us to seamlessly move to an efficient remote working solution, while continuing to provide exceptional service levels to tenants, landlords, buyers and sellers, when many of our competitors simply shut up shop and put their phones to voice mail. It also meant that during lockdown, we've been able to safely conduct thousands of virtual viewings, valuations, essential repairs and rent negotiations and talked to customers over the phone if they just needed advice and support. Before COVID-19, Foxtons was the most recognized estate agency brand in London, bringing together distinctive culture, a centralized business model and a great tech to deliver exceptional service and productivity that justifies our premium fee. And whilst we didn't see COVID-19 come in, and certainly wouldn't have wanted it, I do believe our brand will come out of this stronger and with a greater confidence about how our people and technology can make a difference for our customers in the future. At the time of the placing in April, our objective was to raise sufficient funds to give us the confidence to weather a reasonable worst-case scenario with conviction so that we were not in a position of being forced to resort to major cost cutting defensively, which could significantly impair our ability to take advantage of the weaker competitive landscape and distressed investment opportunities that might emerge should the future be a little brighter than we had expected. As you've seen today, we have a good cash position. Our lettings business continues to recover well, and sentiment in the sales market is positive and feeding through to our pipeline. Our lettings business is already the #1 brand in London with 20,000 tenancies managed through our centralized property management platform, and this foundation provides a solid basis for further investment in high-quality portfolios that fit with our brand and can benefit from the operational leverage in our branch network and service operations. Given the impact of COVID-19 this year and the tenant fee ban last year, we expect valuation multiples for investments to remain relatively low, meaning that good returns may be available where we can acquire portfolios and embed them within our existing infrastructure. Our objective is to keep building stable lettings revenue, both organically and through acquisition, to provide greater protection against sales cycle and further economic uncertainty that typically has a disproportionate impact on sales. In terms of our investment criteria, these are summarized on Slide 20. We're clear about what we want. We're only interested in businesses that fit with our own values. We look for well-run agencies with a strong local presence and high levels of regulatory compliance. And this was the approach we took and what attracted us to London Stone in February this year, and it's pleasing, as Richard mentioned, to see them continue to grow through the pandemic and under Foxtons' ownership. Let me finish on Slide 22 by summarizing where we are now and with a few comments on outlook. The first half has involved a challenging balancing act between securing the safety of our people, supporting customers through anxious times, ensuring that we preserve the long-term prospects of the company while continuing to deliver on our key strategic priorities. All in all, I'm extremely happy and proud of how our people have navigated through these difficult times and often competing priorities. I genuinely believe that we're now stronger than ever as a team and as a brand, and we begin the second half with a level of cautious optimism despite the obvious uncertainties surrounding the economy in public health. Today, we have a well-motivated team back at work, reasonable supply and demand dynamics in sales, letting land mortgage and the recently announced statutory holidays added further positivity to a sales market that was already recovering. Our best-in-class technology continues to provide a compelling differentiator, and our cost base is well under control. Finally, our net cash position provides us with the potential to fund further investments in technology, marketing and lettings portfolios, when and where there are good returns to be made and where they strengthen our strategic capabilities. Looking further, forward visibility is still extremely limited, of course. But I do feel that we are well prepared for further challenging conditions should they develop during the rest of the year, and that there are some reasons to be cautiously optimistic. With that, I'll finish for today and hand over to the coordinator to handle any questions you might have.

[Operator Instructions] We will take our first question today from Sam Cullen from Peel Hunt.

Just got a few questions, if I may. Firstly, on the pipeline, can you just go into a bit more detail and tell us if you're seeing any significant variation either by kind of price point or geography across London and [ even your couple of branch ] you got outside London, if the pipeline is strengthening more there? Secondly, if we don't see a recovery in the second half of the year or into 2021, can you give us an idea of how much you've got left to go on the cost base before you start really kind of cutting into the bone as it were? And then lastly, I guess, just on the Build to Rent demand, a few comments around that or sort of prospects of future growth of that business over the medium term.

Yes. I'll take the first and third of those, and perhaps I'll hand over to Richard on the cost base. In terms of the pipeline, we're seeing a relatively broad improvement in demand across the piece. Of course, we always make the point that whilst there are some very high-value properties in London, the vast majority of transactions occur sort of between the GBP 300,000 and GBP 800,000 level. And so that would typically comprise most of our pipeline. But we're seeing broad improvement. Of course, the aging of our pipeline is important. Most of the deals that we've seen coming to our pipeline, which have grown it over the last 4 to 5 weeks, were obviously relatively green and immature and will probably take 6 to 8 more weeks before those deals are feeding through to significantly increased commissions. So the pipeline, we're very happy with. There's no particular spikes in any regional, geographically or price ban. So it sort of represents a broad recovery and improvement in prospects for sales. On Build to Rent, we've got great relationships with key developers in London. We've got a significant number of lettings applicants that we're dealing with today. And we're really encouraged by the prospects of letting those properties for them. So we see no issues with Build to Rent. The lettings business, as you've seen from the charts and the details, has recovered quite quickly. Q3 is an uphill battle, always is, comparables are tough. But as I said, we're optimistic. Our listings are probably around 40% to 50% up year-on-year, so that gives us a lot to play with. On the cost base, Richard, do you want to just say a bit more about that?

Yes. Thank you, Sam. So I think the business has done a pretty good job, I think, over the last 3 or 4 years in terms of realigning the cost base, I think. It's obviously, as Nic kind of mentioned, difficult to know exactly what demand is going to look like over the next 18 months. But I would say were volumes to be around similar levels to what we saw in 2019, which was good from a lettings perspective. One of the lowest levels of volumes in London over the last 25 years in sales, we think we could deliver similar volumes in 2019 on probably GBP 4 million to GBP 5 million lower cost base. We've had a few questions that have come through on the automated question asking, so to say. First question is from [ Ian Hansen ]. Do you anticipate needing to hire many new people in H2? So on that one, I think I mentioned in the presentation that we had about 400 people on furlough when we opened our branches on the 1st of June. That was now reduced down to 150, and we're continually looking to manage that on a week-by-week basis to manage the number of employees that we've got working with the level of business activity out there, so that we've got a number of employees on furlough that we would go to first. That said, I think we're always going to look out for exciting talent in the London market. So if there were some really capable people out there, that's an option that we would definitely go down if we were to have vacant roles. Question on from Chris Millington. Has the competitive backlog changed due to COVID-19 in either sales or lettings?

Yes. Let me take that one. Obviously, the key, the acid test of competitive intensity is market share, and it's been very difficult with the land registry and other data being relatively difficult and unavailable over the last 4 months to really get a handle on that. Although I do feel as though we performed particularly well in terms of service relationships and market share throughout the last 4 months. That's reflected in the very significant improvements we've seen in our listings on lettings. And it feels like through anecdotal feedback from customers, that they have sometimes struggled making contact or getting in touch with other local agents during the pandemic. So we're very pleased, on a relative basis, how we've managed our service through the period. And we will -- it remains to be seen sort of later in the year, a couple of months' time, when we look back with proper land registry data, I think it fits how that's affected our market share. There definitely has been, I think, a weakening of competitive intensity over the last 3, 4 months, but Q3 is always a good time for state agencies in lettings. And so we don't expect to see that certainly drop off a cliff anytime soon. Patrick, do you want to add anything?