TIDMBLV
RNS Number : 9575H
Belvoir Group PLC
30 March 2020
30 March 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN
ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR")
BELVOIR!
BELVOIR GROUP PLC
(the "Company", the "Group" or "Belvoir")
Statement of audited final results for the year ended 31
December 2019
Strong Group performance achieved 2019 growth
Belvoir Group PLC (AIM: BLV), the UK's largest property
franchise group, is pleased to announce its final results for the
year ended 31 December 2019.
Financial highlights
-- Group revenue increased by 43% to GBP19.3m (2018: GBP13.4m)
-- Growth in management service fees ("MSF") of 4% to GBP8.8m (2018: GBP8.5m)
-- Profit before tax of GBP5.6m (2018: GBP5.5m including an exceptional credit of GBP0.6m)
-- Strong lettings bias and increasing importance of financial
services reflected in gross profit ratio of 61% lettings:16%
sales:19% financial services: 4% other (2018: 67%:17%:10%:6%)
-- Strong balance sheet with year-end cash of GBP3.6m (2018: GBP1.8m)
-- Net debt reduced significantly to GBP6.9m (2018: GBP9.6m)
Operational highlights
-- Exchanged on the acquisition of 17-office franchised estate
agency network Lovelle in December 2019, with completion in January
2020
-- 24 (2018: 26) assisted acquisitions by franchisees adding
over GBP6.6m (2018: GBP6.9m) to franchisee network revenue
-- The Group now manages 68,550(1) (2018: 62,780) properties
-- Average MSF per franchise office up 35% in four years
-- 35% net increase in financial service advisers to 166 (2018: 123)
-- Number of offices up to 396(1) (2018: 365)
Dorian Gonsalves, Chief Executive Officer of Belvoir Group,
commented:
"Whilst 2020 will be adversely affected during the period of
economic inactivity due to Covid-19, the Group has achieved a very
good set of results for 2019, with outstanding revenue performance,
having overcome the twin challenges of the tenant fee ban and the
economic and political uncertainty surrounding Brexit.
Looking at the year ahead, trading was strong and in line with
management expectation in the first two months of the year, and the
recurring nature of our lettings revenue gives the Group a high
degree of resilience. The Board has acted swiftly in response to
Covid-19 to put in place measures for the Group and for our
franchisees, to enable us collectively to mitigate some of the
short-term downturn in revenue. Notwithstanding these measures,
Covid-19 is expected to have a significant impact on trading in
2020 and therefore the Board has prudently decided against
proposing a final dividend for 2019. It is difficult to predict
exactly how long this impact will continue, but the Board is
confident that the Group has a strong balance sheet with adequate
resources to weather the storm, and to operate within its bank
covenants for the foreseeable future. We believe that in operating
a franchise model, we have both the agility and capability to
emerge from the crisis in a good position to capitalise on future
opportunities within the sector, and return to growth and winning
market share."
For further details:
Belvoir Group PLC 01476 584900
Dorian Gonsalves, Chief Executive Officer investorrelations@belvoirgroup.com
Louise George, Chief Financial Officer
www.belvoirgroup.com
finnCap
Julian Blunt, Teddy Whiley (Corporate Finance)
Tim Redfern, Manasa Patil (ECM)
www.finncap.com +44 (0) 20 7220 0500
Buchanan +44 (0) 20 7466 5000
Charles Ryland, Victoria Hayns & Tilly
Abraham
Notes:
About Belvoir Group PLC
Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir
operates a nationwide property franchise group with 396 offices
across five brands specialising in residential lettings, property
management, residential sales and property-related financial
services. With its Central Office in Grantham, Lincolnshire, the
Group manages 68,550 properties and reported record revenues of
GBP19.3m in 2019 making Belvoir the largest property franchise
group in the UK.
For further information, please visit: www.belvoirgroup.com
Chairman's statement
As we enter a period of extreme economic uncertainty, I will
report on both our strong performance in 2019 and our assessment of
the impact of Covid-19 on our business and the actions that we are
taking to weather the storm.
Performance
On the positive side, I can start by reporting that in 2019
Belvoir achieved its 23(rd) year of uninterrupted profit growth
despite the introduction of the tenant fee ban, the turmoil
surrounding Brexit and the build-up to the general election in
December 2019. Revenues increased by an impressive 43% driven by a
strong performance from our property franchise network and
significant contributions from our financial services division.
Profit before tax increased to GBP5.6m (2018: GBP5.5m), up GBP0.7m
when taking the net exceptional credit of GBP0.6m in 2018 into
account. These are excellent results given the backdrop of a
relatively flat property market. The Group now operates through 396
individual businesses, with the average MSF per franchise office up
35% over the last four years. This increase confirms the attitude
our franchisees take in developing and growing their businesses
through portfolio acquisitions and becoming more active in the
sales market, together with the addition of financial services.
Meanwhile, our network of financial advisers is up to 166 from just
13 in 2016, demonstrating the effectiveness of our financial
services strategy.
Governance
The Board continues to apply the 2018 Quoted Companies Alliance
Corporate Governance Code (the "QCA Code") as the basis of the
Group's governance framework as adopted last year. Within the
Belvoir Group we promote a culture of good governance and we
recognise how important our people are to the success of the
Group.
Board and senior management
On behalf of the Board, I would like to say thank you to our
founder, Mike Goddard, who retired as Chairman in May 2019, for his
entrepreneurial drive that has made Belvoir the company it is
today.
Belvoir benefits from the longevity and stability of its highly
skilled Executive Team of Directors and senior managers in
providing the continuity of knowledge and experience that has
underpinned the successful growth of the Group. This is of
particular value in the difficult times we now find ourselves in
the near term.
Covid-19, dividend and outlook
Whilst trading in the year to date had been encouraging and in
line with management expectations, Covid-19 has introduced huge
uncertainty in the year ahead for our industry and the wider
economy. Despite the resilience of our core lettings business, we
will not be immune to the effects of reduced levels of property
sales and mortgage transactions, and the higher risk of bad debts
and non-payment of rent.
In accordance with the UK Government's guidance, with effect
from 24 March our corporate offices have closed and our franchise
and financial services offices have been advised to do likewise. We
have considered the risk to the critical services we provide to
franchisees and are satisfied that, even with our teams working
remotely from home, we will still be able to provide the necessary
support in a reasonable timeframe to enable our franchisees to
continue to service our landlords and tenants to the extent that is
possible under the current conditions. As a Board we are mindful of
the risks and are advising our staff, our franchisees and our
advisers on how best to protect themselves, their business and
members of the public.
We will be working closely with our franchisees and advisers to
support them in reshaping their businesses for the next few months
and furthermore, how they can access the various Government
financial support packages. We have also put in place our own
financial measures to support our franchisees through the
crisis.
These are uncharted times and it is difficult to predict how
long the Covid-19 outbreak will affect the property industry and to
what extent. In operating a franchise business model, Belvoir bears
none of the costly infrastructure of a large corporate network, and
the Board has been able to respond quickly and decisively to
restructure our cost base to reflect the anticipated change in
trading conditions. Having revised forecasts to model a range of
possible downside outcomes for the rest of the calendar year
together with sensitised forecasts for 2021, the Board is confident
that the Group has a strong balance sheet with adequate resources
to be able to weather the storm, and to operate within its bank
covenants, for the foreseeable future. However, given the scale of
the global crisis and the inevitable uncertainty, we have decided
that it would be prudent not to propose a final dividend for 2019,
conserving cash as a precaution. Despite these concerns, we are
positive about our ability to manage the challenge of the current
climate and thrive once markets return to normal levels, at which
point we would expect to reinstate our progressive dividend
policy.
Finally, I would like to thank all our staff for their
contribution to achieving such a great performance in 2019 and for
their support during the Covid-19 crisis.
Michael Stoop
Non-Executive Chairman
Chief Executive Officer's statement
2019 was another very good year for the Group and is testament
to the resilience of the Belvoir business model with both our
property franchise and our financial services divisions performing
exceptionally well.
Performance
The Group achieved a year of outstanding growth with revenue
increasing 43% to GBP19.3m (2018: GBP13.4m). Our property division
was up 6% and our financial services division was up 159%, with the
Group more than overcoming the twin challenges of the tenant fee
ban and markets subdued by the political and economic
uncertainty.
Management Service Fees (MSF), the Company's core income from
franchisees, increased by 4% to GBP8.8m (2018: GBP8.5m). In a year
when our franchisees expected to lose 10% of their lettings revenue
due to the tenant fee ban from 1 June and with the rental index at
1.4%, MSF from lettings increased by 3% with our franchisees having
succeeded in mitigating the impact of the tenant fee ban by
December 2019, ahead of management's expectations. Part of the
mitigation arose from the ongoing success of the assisted
acquisitions programme which supported 24 franchisees to make a
local portfolio acquisition, adding GBP6.6m to franchise network
revenue, 4,500 managed properties and around GBP0.6m p.a. of
ongoing MSF. Mitigation by our lettings-biased Belvoir and
Northwood franchisees also came from an increased focus on property
sales. Against what was quite a flat year for the UK property sales
market with house price inflation at 2.2% and house transactions
down 0.9%, MSF from sales was up 16% across those two networks and
up 9% across the Group. By Q4 2019 franchise network revenue was
noticeably higher than it was in Q4 2018 demonstrating our
franchisees' ability to overcome changes in the sector.
The Group's diversification into financial services has been a
great success delivering significant growth in 2019 following the
acquisition of MAB (Gloucester) in November 2018, and a 35%
increase in the Group's financial services network. Contributing
19% of gross profit, financial services is of growing importance to
the Group. By the year end Belvoir had 166 (2018: 123) financial
advisers offering specialist high street mortgage advice both to
our Group franchisees and to independent agents. Additionally, in
November 2019 the Group announced an eight-year exclusivity
agreement with Dacres, a 20-office estate agency network based in
Yorkshire, to deliver financial services to its extensive client
base.
Across all three areas of lettings, sales and financial
services, Belvoir outperformed the market. Belvoir now has a
portfolio of 68,550 (2018: 62,780) managed properties, a record
level for the Group and which represents one of the largest
portfolios in the UK. In 2019 Group house sales were up 9% to 7,433
(2018: 6,815) and the number of mortgages arranged was up 240% to
9,342 (2018: 2,746). The Group's network revenue, this being the
total revenue across all our Group companies, our franchisees and
our financial advisers, totalled GBP93m (2018: GBP83m).
Our strategic priorities
Given the current unprecedented economic conditions, our
priorities in the short term are to ensure the safety of our staff
and other stakeholders and to safeguard the business. The Board has
sought to manage the impact on our short-term financial performance
by reviewing overheads to remove non-critical costs, reducing
headcount to match the foreseeable needs of the business whilst
retaining key skills and infrastructure necessary to support
franchisees and advisers, and the Board, brand MDs and senior
managers have volunteered to take a temporary salary reduction. The
Board greatly appreciates the commitment of our staff throughout
the Group during these difficult times. We are also reviewing the
Government's stimulus package to ensure that the Group benefits
from the financial help available.
Our franchise support team will be focused entirely on advising
franchisees how to restructure their business to minimise costs in
response to lower trading activity, how to access the Government
support available to them and how to safely continue to deliver
services to their landlords and vendors. Our financial support
package for franchisees includes a six-month capital repayment
holiday to those franchisees who have borrowed funds from Belvoir
to grow through our assisted acquisitions programme. We have also
waived our monthly minimum fees to franchisees so that MSF are
wholly percentage based; this means any reduction in income for our
franchisees is matched by a proportionate reduction in the MSF
payable to Belvoir, and as such we share the burden of any downturn
in revenue during the period of the crisis. We firmly believe in
the resilience of our franchise model and we are confident that the
short-term measures taken will enable the Group to support its
franchisees during the lockdown period and to emerge from the
crisis in a strong position to capitalise on business opportunities
as the market returns to normal.
The Group's longer-term strategic priorities remain to position
the Group to benefit from further consolidation within the sector
at both franchisee and Group level, to introduce additional revenue
streams to our franchisees and to extend our financial services
network across the UK.
With the early 2020 acquisition of Lovelle, Belvoir has taken a
further step in its multi-franchise strategy by bringing a new
franchise network into the Group. From operating a single national
franchise brand, Belvoir, with 162 offices five years ago, the
Group now operates four franchise brands with 313 estate and
lettings agency offices across the UK. A key focus for 2020 will be
the integration of Lovelle into the Group.
We will continue to support franchisees to "buy and build"
through our assisted acquisitions programme so that they can
benefit from the further consolidation anticipated as smaller
independent agents, struggling to overcome the financial impact of
the tenant fee ban and contemplating the further regulation
proposed in the Recommendations for Government on the Regulation of
Property Agents (RoPA) report, decide to exit the sector.
The expansion of our financial adviser network remains a
critical part of our strategy of offering local financial services
advice through our property franchise offices. Our existing 166
advisers are primarily based in the South West, Wales, the West
Midlands and Yorkshire, so our aim is to extend our financial
services network across the rest of the UK.
Creating value
The healthy growth of our property franchisees and financial
advisers, supported by our strategic priorities, underpins the
creation of value for our stakeholders. At a Group level, our
investment in additional franchise networks and in financial
services has helped to deliver a 155% increase in profit before tax
to GBP5.6m (2015: GBP2.2m) and a 105% increase in EPS to 13.3p
(2015: 6.5p) over four years.
Our marketplace
Over the past three years, there has been a general slowdown in
UK house price growth, driven mainly by low and, at times, falling
prices in London, the South East and the East of England, possibly
areas of the UK disproportionately affected by the ongoing
uncertainty around Brexit. Against this backdrop we were delighted
to report increases in Group income from property sales of 8% in
2018 and 9% in 2019, outperforming the market as we continue to
build Belvoir's market share.
The main long-term recurring theme within the housing market is
that supply remains constrained whilst demand continues to rise for
all tenures. With the UK population forecast to grow by 3 million
people by 2028 and the likelihood that there will be insufficient
UK house building to address the ongoing supply deficit, we
anticipate that in the medium term the sector will continue to see
upward pressure on rents and house prices.
The publication of the RoPA report reflects the intention of the
Government to professionalise the sector with the introduction of
mandatory qualifications, a new system of regulation of property
agents and a new licensing regime for agents. As a Group, Belvoir
already embraces the high standards of training and compliance
being recommended so we very much welcome these proposals aimed at
improving the overall standards within the sector and creating a
more level playing field for those, such as our franchisees, who
already bear the cost of delivering a highly professional
service.
Outlook
With the tenant fee ban now both behind us and mitigated, we had
anticipated a more stable political and economic landscape in the
year ahead, and trading in the early months of 2020 proved very
encouraging. Covid-19 has rapidly changed that landscape and is
expected to have a significant impact on trading in 2020. It is
difficult to predict exactly how long this impact will continue,
but we have secure financing, continue to operate within our
covenants and remain confident that we will be well placed to
capitalise on any upturn when it arises, and return to growth and
winning market share.
Dorian Gonsalves
Chief Executive Officer
Financial review
Revenue
Group revenue in 2019 increased by GBP5.8m to GBP19.3m (2018:
GBP13.4m) of which GBP4.1m reflected the full year's impact of our
2018 acquisition of MAB Glos, GBP1.1m arose from the extension of
our financial adviser network and GBP0.6m related to the continued
growth of our property franchise division.
MSF, our key underlying revenue stream, increased by 4% to
GBP8.8m (2018: GBP8.5m). Lettings MSF was up 3% to GBP7.3m (2018:
GBP7.1m) in spite of the ban on tenant fees from 1 June which
reduced franchisee income from lettings by 10%. This was in part
mitigated by additional MSF arising from our successful assisted
acquisitions programme. At the same time, our MSF from property
sales increased by 9% to GBP1.5m (2018: GBP1.3m) as many of our
lettings-biased franchisees looked to sales as a means to diversify
their income.
Income from corporate-owned offices was up GBP0.3m primarily as
a result of the acquisition of two lettings portfolios by Newton
Fallowell for the Grantham corporate office, one in September 2018
and the other in May 2019. The Group continues to operate two
corporate-owned offices, Belvoir Grantham and Newton Fallowell
Grantham, both of which remain profitable and will be retained long
term. In November 2019 we took back our Northwood Glossop office
which will be operated as a corporate office until a franchise
solution can be found.
Revenue from franchise sales in 2019 was GBP0.2m (2018:
GBP0.2m). We opened six (2018: six) new offices in 2019 all of
which were the result of an existing franchisee making an assisted
acquisition in an adjacent territory. We also saw eight (2018: ten)
existing franchisees sell their business with five going to a new
franchise owner and three being acquired by an existing
franchisee.
Other income remained static at GBP0.5m (2018: GBP0.5m).
Overall, our property division achieved 6% revenue growth with
the ratio of lettings to sales remaining relatively unchanged at
79:21 (2018: 80:20).
Revenue from our financial services division was up 159% to
GBP8.5m (2018: GBP3.3m) partly having benefited from a full year of
ownership of MAB Glos, acquired in November 2018, and partly due to
a 35% increase in the number of advisers operating within our
financial services network.
Gross profit
Gross profit increased by 17% to GBP13.2m (2018: GBP11.3m) with
the gross profit ratio by business activity: lettings 61%, sales
16%, financial services 19% and other 4% (2018: 67%:17%:10%:6%)
reflecting the increased importance of financial services.
Administrative expenses
Non-exceptional administrative expenses increased by GBP1.0m to
GBP7.6m (2018: GBP6.6m). This increase reflected the GBP0.4m
incremental cost of operating MAB Glos for a full year (2018: five
weeks), GBP0.1m additional staff costs following the acquisition of
two small landlord portfolios by Newton Fallowell and GBP0.1m
increased operational costs of Brook to support growth in financial
services. In 2018 the Group received a GBP0.2m repayment of
employment taxes from HMRC in relation to the settlement of a
Northwood employment scheme operated prior to Northwood being
acquired by the Group.
Within administrative expenses there is a charge of GBP0.2m
(2018: GBP0.2m) associated with the share options issued to
Directors and certain staff between 2014 and 2018.
There were no exceptional administrative expenses in 2019 (2018:
GBP0.2m). The 2018 exceptional administrative costs related to
GBP0.1m of professional fees associated with the acquisition of MAB
Glos and GBP0.1m of Northwood restructuring costs.
Operating profit
Operating profit was GBP5.7m (2018: GBP4.5m), an increase of 25%
over the prior year.
Exceptional items
There were no exceptional items in 2019, whereas in 2018 there
was an exceptional credit of GBP0.8m relating to the change in fair
value to contingent consideration following the final settlement of
the Northwood consideration which was based on performance during
the year to 31 May 2018.
Profit before taxation
Profit before taxation of GBP5.6m (2018: GBP5.5m) is after
interest receivable on franchisee loans of GBP0.2m (2018: GBP0.3m),
which is regarded by the Group as part of its ongoing operations to
extend the network reach.
Prior year adjustments
The Directors have restated prior years in respect of the
release of deferred taxation in relation to the amortisation of
acquired intangibles and the recognition of a deferred tax asset
associated with the current valuation of share options. The
deferred tax liability has been restated to reflect the
accumulative effect of GBP219,000 as at 1 January 2018 and a
further GBP82,000 in 2018. The deferred tax asset has been restated
to reflect the accumulative effect of GBP26,000 as at 1 January
2018 and a further GBP44,000 in 2018. The total impact on profit in
2018 was a credit of GBP126,000. Applying the same accounting
treatment to 2019 has given rise to a comparative credit of
GBP243,000. The difference is due to the uplift of the valuation of
share options based on the increase in the share price during the
year.
The liability for unearned indemnity commission (UIC), reported
as a refund liability within current trade and other payables, has
been restated to the gross liability payable by the Group, whereas
in prior years this had been reported net of the element of the UIC
liability recoverable from the financial advisers. As purely a
matter of grossing up this has no impact on the net financial
performance of the Group. Other debtors have been restated to
reflect the corresponding indebtedness from financial advisers.
Taxation
The effective rate of corporation tax for the year was 16.6%
(2018: 17.9%).
Earnings per share
Basic earnings per share was up 3% to 13.3p (2018: 12.9p) based
on an average number of shares in issue in the year of 34,938,606
(2018: 34,638,939). When the dilutive effect of share options is
incorporated, the earnings per share was 12.9p (2018: 12.6p).
Profit attributable to owners was GBP4.7m (2018: GBP4.5m), with
the 2018 profit reflecting the net exceptional credit of
GBP0.6m
Dividends
The interim dividend of 3.4p (2018: 3.4p) was paid to
shareholders on 24 October 2019. As a prudent measure given the
uncertainty caused by Covid-19, the Board has decided not to
propose a final dividend.
Cash flow
The net cash inflow from operations was GBP6.0m (2018: GBP4.6m)
reflecting the enlarged Group.
The net cash used in investing activities was GBP0.3m (2018:
GBP6.4m):
-- Newton Fallowell Limited acquired the trade and assets of EBG
for GBP0.2m; this comprised a small lettings portfolio which was
brought into the corporate-owned Newton Fallowell Grantham
office.
-- Deferred consideration of GBP0.2m was paid relating to the acquisition of MAB Glos
-- Brook Financial Services acquired Purely Mortgage Consultants for GBP0.1m in cash.
-- GBP0.05m was received following the sale of Belvoir Leeds
South to the Belvoir Leeds North West franchisee.
-- The net cash inflow from the franchise loan book was GBP0.1m (2018: GBP1.1m).
-- Interest received on the franchise loan book was GBP0.2m (2018: GBP0.3m).
In March 2018 HSBC advanced the Group GBP12.0m out of which the
existing NatWest loan of GBP6.5m was settled. During 2019 GBP0.9m
(2018: GBP0.5m) was repaid against the HSBC loan and associated
finance costs of GBP0.3m (2018: GBP0.3m). Dividend payments
totalled GBP2.5m (2018: GBP2.4m). As a result, net cash outflow
from financing activities totalled GBP4.0m (2018: net cash inflow
of GBP2.3m).
Liquidity and capital resources
At the year end the Group had cash balances of GBP3.6m (2018:
GBP1.8m) and a term loan of GBP10.5m (2018: GBP11.5m). The HSBC
facility is repayable at GBP0.9m per year in half yearly repayments
until March 2023 followed by a final repayment of GBP7.9m.
IFRS 16 Leases
With effect from 1 January 2019 operating leases, previously
charged to administrative expenses, are now accounted for on the
balance sheet. The associated asset is held as a right-of-use asset
and the lease liability is accounted for within current and
non-current liabilities. As a result, GBP0.6m was recognised as
additional tangible fixed assets together with an equivalent
additional lease liability as of 1 January 2019, and the 2019
operating charge of GBP0.2m was replaced by a depreciation charge
of GBP0.2m and a nominal interest charge. This did not materially
change our reporting of operating profit.
Unearned indemnity commission
Associated with our growing financial services division is the
accounting treatment of unearned indemnity commission. This
comprises three elements:
-- The Group accounts for amounts withheld by Mortgage Advice
Bureau from weekly commission payments in respect of unearned
indemnity commission within other debtors. At the year end this
balance was GBP1.2m (2018: GBP1.1m).
-- Revenue is constrained to reflect the estimated clawback of
commission by Mortgage Advice Bureau arising on the cancellation of
life assurance policies within four years following inception and a
refund liability is recognised for unearned indemnity commission.
At the year end the refund liability was GBP1.1m (2018:
GBP0.9m).
-- Also, on a weekly basis the estimated clawback of commission
recoverable from our financial advisers is accounted for within
other debtors. At the year end this balance was GBP0.4m (2018:
GBP0.3m).
Post-year-end acquisition
In January 2020 the Group acquired the business and assets of
the estate agency business operated by Lovelle Estate Agency
Limited and Lovelle Bacons LLP (collectively referred to as
"Lovelle"), a predominantly franchised estate agency network
operating in Lincolnshire and the Humber region. The overall
consideration for the acquisition was GBP2.0m which was satisfied
in cash from existing cash reserves. In the year to 31 March 2019
Lovelle made an operating profit of GBP500,000 and at that date had
net assets of approximately GBP100,000.
Financial position
The Group continues to operate from a sound financial platform
and is strongly cash generative. The opening cash balance of
GBP3.6m enabled the Group to acquire the Lovelle network in January
2020. In the wake of the Covid-19 crisis, the Group has revised its
forecasts against a range of possible downside outcomes and the
Board has concluded that the Group has adequate resources to
continue in operational existence, to meet its financial
obligations including the 2020 bank loan repayment of GBP0.9m and
to operate within its bank covenants, for the foreseeable
future.
Louise George
Chief Financial Officer
Group statement of comprehensive income
For the financial year ended 31 December 2019
2018
2019 GBP'000
Notes GBP'000 As restated
-------------------------------------------------- ----- -------- ------------
Continuing operations
Revenue 3 19,252 13,433
Cost of sales 4 (6,036) (2,103)
-------------------------------------------------- ----- -------- ------------
Gross profit 13,216 11,330
-------------------------------------------------- ----- -------- ------------
Administrative expenses
Non-exceptional 4 (7,556) (6,616)
Exceptional 6 - (169)
-------------------------------------------------- ----- -------- ------------
(7,556) (6,785)
-------------------------------------------------- ----- -------- ------------
Operating profit 5,660 4,545
Changes in fair value to contingent consideration - 809
Finance costs (342) (226)
Finance income 230 265
Other income 32 87
-------------------------------------------------- ----- -------- ------------
Profit before taxation 5,580 5,480
Taxation (928) (980)
-------------------------------------------------- ----- -------- ------------
Profit and total comprehensive income for the
financial year 4,652 4,500
-------------------------------------------------- ----- -------- ------------
Profit for the year attributable to the equity
holders of the parent company 4,652 4,500
-------------------------------------------------- ----- -------- ------------
Earnings per share attributable to equity holders
of the Parent Company
Basic 8 13.3p 12.9p
Diluted 8 12.9p 12.6p
-------------------------------------------------- ----- -------- ------------
The Group's results shown above are derived entirely from
continuing operations.
The accompanying notes form an integral part of these condensed
consolidated financial statements.
Statements of financial position
As at 31 December 2019
Group Company
---------------------------- ----- ---------------------- ------------ ------------------
31/12/2018 01/01/2018
2019 GBP'000 GBP'000 2019 2018
Notes GBP'000 As restated As restated GBP'000 GBP'000
---------------------------- ----- -------- ------------ ------------ -------- --------
Assets
Non-current assets
---------------------------- ----- -------- ------------ ------------ -------- --------
Intangible assets 29,069 29,156 26,162 - -
Investments - - - 39,910 39,722
Financial assets 159 159 - - -
Property, plant and
equipment 593 646 635 44 35
Right-of-use assets 9 616 - - - -
Trade and other receivables 2,053 2,768 3,617 - -
---------------------------- ----- -------- ------------ ------------ -------- --------
32,490 32,729 30,414 39,954 39,757
Current assets
---------------------------- ----- -------- ------------ ------------ -------- --------
Trade and other receivables 4,575 3,998 2,813 6,729 6,490
Cash and cash equivalents 10 3,586 1,798 1,350 1,412 214
---------------------------- ----- -------- ------------ ------------ -------- --------
8,161 5,796 4,163 8,141 6,704
---------------------------- ----- -------- ------------ ------------ -------- --------
Total assets 40,651 38,525 34,577 48,095 46,461
---------------------------- ----- -------- ------------ ------------ -------- --------
Liabilities
Non-current liabilities
---------------------------- ----- -------- ------------ ------------ -------- --------
Lease liabilities 9 442 - - - -
Interest-bearing loans
and borrowings 11 9,591 10,452 5,578 9,591 10,452
Deferred tax liability 14 1,440 1,647 1,744 7 6
---------------------------- ----- -------- ------------ ------------ -------- --------
11,473 12,099 7,322 9,598 10,458
Current liabilities
---------------------------- ----- -------- ------------ ------------ -------- --------
Trade and other payables 3,141 2,768 6,137 264 1,169
Lease liabilities 9 178 - - - -
Interest-bearing loans
and borrowings 11 861 925 866 861 925
Corporation tax liability 711 769 566 - -
---------------------------- ----- -------- ------------ ------------ -------- --------
4,891 4,462 7,569 1,125 2,094
---------------------------- ----- -------- ------------ ------------ -------- --------
Total liabilities 16,364 16,561 14,891 10,723 12,552
---------------------------- ----- -------- ------------ ------------ -------- --------
Total net assets 24,287 21,964 19,686 37,372 33,909
---------------------------- ----- -------- ------------ ------------ -------- --------
Equity
Shareholders' equity
---------------------------- ----- -------- ------------ ------------ -------- --------
Share capital 349 349 349 349 349
Share premium 12,006 12,006 12,006 12,006 12,006
Share-based payments
reserve 524 337 148 524 337
Revaluation reserve 162 162 162 (50) (50)
Merger reserve (5,774) (5,774) (5,774) 8,101 8,101
Retained earnings 17,020 14,884 12,795 16,442 13,166
---------------------------- ----- -------- ------------ ------------ -------- --------
Total equity 24,287 21,964 19,686 37,372 33,909
---------------------------- ----- -------- ------------ ------------ -------- --------
A third Group statement of financial position as at the 1
January 2018 has been shown above to show the effect of the prior
year restatement as detailed in note 15. These restatements had no
impact on the Company.
The Company made a profit after tax in the year of GBP5,792,000
(2018: GBP3,505,000).
The accompanying notes form an integral part of these condensed
consolidated financial statements.
Statements of changes in equity
For the financial year ended 31 December 2019
Group
Share-based Retained Total
Share Share payments Revaluation Merger earnings equity
capital premium reserve reserve reserve GBP'000 GBP'000
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 As restated As restated
----------------------- ----- -------- -------- ----------- ----------- -------- ------------ ------------
Balance at 1 January
2018 349 12,006 148 162 (5,774) 12,795 19,686
Changes in equity
Issue of equity
share capital - - - - - - -
Share-based payments 5 - - 189 - - - 189
Dividends 7 - - - - - (2,411) (2,411)
----------------------- ----- -------- -------- ----------- ----------- -------- ------------ ------------
Transactions with
owners - - 189 - - (2,411) (2,222)
Profit and total
comprehensive income
for the financial
year - - - - - 4,500 4,500
----------------------- ----- -------- -------- ----------- ----------- -------- ------------ ------------
Balance at 31 December
2018 349 12,006 337 162 (5,774) 14,884 21,964
Issue of equity
share capital - - - - - - -
Share-based payments 5 - - 187 - - - 187
Dividends 7 - - - - - (2,516) (2,516)
----------------------- ----- -------- -------- ----------- ----------- -------- ------------ ------------
Transactions with
owners - - 187 - - (2,516) (2,329)
Profit and total
comprehensive income
for the financial
year - - - - - 4,652 4,652
----------------------- ----- -------- -------- ----------- ----------- -------- ------------ ------------
Balance at 31 December
2019 349 12,006 524 162 (5,774) 17,020 24,287
----------------------- ----- -------- -------- ----------- ----------- -------- ------------ ------------
Company
Share-based
Share Share payments Revaluation Merger Retained Total
capital premium reserve reserve reserve earnings equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ----- -------- -------- ----------- ----------- -------- --------- --------
Balance at 1 January
2018 349 12,006 148 (50) 8,101 12,072 32,626
Changes in equity
Issue of equity
share capital - - - - - - -
Share-based payments 5 - - 189 - - - 189
Dividends 7 - - - - - (2,411) (2,411)
----------------------- ----- -------- -------- ----------- ----------- -------- --------- --------
Transactions with
owners - - 189 - - (2,411) (2,222)
Profit and total
comprehensive income
for the financial
year - - - - - 3,505 3,505
----------------------- ----- -------- -------- ----------- ----------- -------- --------- --------
Balance at 31 December
2018 349 12,006 337 (50) 8,101 13,166 33,909
Issue of equity
share capital - - - - - - -
Share-based payments 5 - - 187 - - - 187
Dividends 7 - - - - - (2,516) (2,516)
----------------------- ----- -------- -------- ----------- ----------- -------- --------- --------
Transactions with
owners - - 187 - - (2,516) (2,329)
Profit and total
comprehensive income
for the financial
year - - - - - 5,792 5,792
----------------------- ----- -------- -------- ----------- ----------- -------- --------- --------
Balance at 31 December
2019 349 12,006 524 (50) 8,101 16,442 37,372
----------------------- ----- -------- -------- ----------- ----------- -------- --------- --------
The accompanying notes form an integral part of these condensed
consolidated financial statements.
Statements of cash flows
For the financial year ended 31 December 2019
Group Company
------------------ ------------------
2019 2018 2019 2018
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ----- -------- -------- -------- --------
Operating activities
------------------------------------------- ----- -------- -------- -------- --------
Cash generated from/(used in) operating
activities 13 7,285 5,612 (2,090) (2,216)
Tax paid (1,237) (1,018) - -
------------------------------------------- ----- -------- -------- -------- --------
Net cash flows generated from/(used
in) operating activities 6,048 4,594 (2,090) (2,216)
Investing activities
------------------------------------------- ----- -------- -------- -------- --------
Acquisitions net of cash acquired (338) (3,595) - -
Deferred and contingent consideration (243) (4,236) - (4,236)
Capital expenditure on property, plant
and equipment (99) (140) (24) (2)
Disposal of corporate offices 54 45 - -
Franchisee loans granted (1,242) (729) - -
Loans repaid by franchisees 1,380 1,806 - -
Finance income received 230 265 2 4
Return of funds from escrow - 145 - 145
Dividends received - - 7,100 4,000
------------------------------------------- ----- -------- -------- -------- --------
Net cash flows (used in)/generated
from investing activities (258) (6,439) 7,078 (89)
Financing activities
------------------------------------------- ----- -------- -------- -------- --------
Bank loan advance - 12,000 - 12,000
Loan repayments (938) (7,000) (938) (7,000)
Equity dividends paid 7 (2,516) (2,411) (2,516) (2,411)
Lease payments 9 (212) - - -
Finance costs (336) (296) (336) (296)
------------------------------------------- ----- -------- -------- -------- --------
Net cash generated from/(used in)
financing activities (4,002) 2,293 (3,790) 2,293
------------------------------------------- ----- -------- -------- -------- --------
Net change in cash and cash equivalents 1,788 448 1,198 (12)
Cash and cash equivalents at the beginning
of the financial year 1,798 1,350 214 226
------------------------------------------- ----- -------- -------- -------- --------
Cash and cash equivalents at the end
of the financial year 10 3,586 1,798 1,412 214
------------------------------------------- ----- -------- -------- -------- --------
The accompanying notes form an integral part of these condensed
consolidated financial statements.
Notes to the financial statements
For the financial year ended 31 December 2019
1 Approval
This announcement was approved by the Board of Directors on 30
March 2020.
2 Accounting policies
General information
Belvoir Group PLC is the ultimate parent company of the Group,
whose principal activity during the year under review was that of
selling, supporting and training residential property franchises.
The Group also operates a network of financial service advisers
who, through our franchise property networks, provide advice to our
residential property clients.
Belvoir Group PLC, a public company limited by shares listed on
AIM, is incorporated and domiciled in the United Kingdom.
Registered office
The address of the registered office and principal place of
business of Belvoir Group PLC is The Old Courthouse, 60A London
Road, Grantham, Lincolnshire NG31 6HR.
Basis of preparation
This final results announcement for the year ended 31 December
2019 has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
("IFRSs") as adopted for use in the European Union and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The accounting policies applied are consistent with
those set out in the Belvoir Group plc Annual Report and Accounts
for the year ended 31 December 2019.
The financial information contained within this final results
announcement for the year ended 31 December 2019 and the year ended
31 December 2018 is derived from but does not comprise statutory
financial statements within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 31
December 2018 have been filed with the Registrar of Companies and
those for the year ended 31 December 2019 will be filed following
the Company's annual general meeting. The auditors' report on the
statutory accounts for the year ended 31 December 2019 and the year
ended 31 December 2018 is unqualified, does not draw attention to
any matters by way of emphasis, and does not contain any statement
under section 498 of the Companies Act 2006.
Going concern and Covid-19
The impact of the Covid-19 pandemic has been considered by the
Directors, as further explained in the Chairman's statement and the
Chief Executive Officer's statement. The Directors have revised the
forecasts for the Group taking into account the impact of Covid-19
on trading over the twelve months from the date of signing the
financial statements. The forecasts have been assessed against a
range of possible downside outcomes, reflecting significantly lower
levels of income in line with lower lettings, sales and mortgage
activity, reduced headcount, a lower cost base and extended payment
terms to franchisees. The base case model reflects these
sensitivities for the rest of this financial year.
After consideration of these forecasts and making appropriate
enquiries, the Directors have a reasonable expectation that the
Group and the Company have adequate resources to continue in
operational existence and to meet its bank covenants for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the accounts. Aside from Covid-19,
there are no other matters, of which Directors are aware, that may
impact on the Group and Company's ability to continue as a going
concern by reference to the guidance issued by the Financial
Reporting Council on going concern assessment.
Standards adopted for the first time
There is one new standard, IFRS 16 Leases, effective for annual
periods beginning after 1 January 2019. The adoption of this
standard, applying the simplified transition approach and no
restatement of comparative amounts for the year ended 31 December
2018, has not had an impact on the Group's financial statements,
except the following, set out below:
-- IFRS 16 Leases came into effect on 1 January 2019 addressing
the definition of a lease, recognition and measurement of leases,
and establishes principles for reporting useful information to
users of financial statements about the leasing activities of both
lessees and lessors. A key change arising from IFRS 16 is that most
operating leases are now accounted for on balance sheet for
lessees. The Directors reviewed the contracts for all property,
vehicle and equipment leases held by the Group to identify any
additional lease arrangements that needed to be recognised under
IFRS 16. As a result, GBP0.6m was recognised as additional tangible
fixed assets together with an additional lease liability as of 1
January 2019, and the 2019 operating charge of GBP0.2m was replaced
by depreciation charge of GBP0.2m and a nominal interest charge.
This did not materially change our reporting of operating
profit.
Standards, amendments and interpretations to existing standards
that are not yet effective
There are no new standards, amendments to existing standards or
interpretations that are effective as at 31 December 2019 relevant
to the Group.
3 Segmental information
The Executive Committee of the Board, as the chief operating
decision maker, reviews financial information for and makes
decisions about the Group's overall franchising business. In the
year ended 31 December 2019 the Board identified two operating
segments, that of franchisor of property agents and
property-related financial services.
The Directors consider gross profit as the key performance
measure. The reported segment is consistent with the Group's
internal reporting for performance measurement and resources
allocation.
Management does not report on a geographical basis and no
customer represents greater than 10% of total revenue in either of
the periods reported. The Directors believe there to be: three
material property franchise income streams, which are management
service fees, revenue from corporate-owned offices and fees on the
sale or resale of franchise territory fees; and one material
financial services income stream, which is commission receivable on
financial services. These revenue streams are split as follows:
Lettings Property sales Total revenue
------------------ ------------------ ------------------
2019 2018 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- -------- -------- -------- -------- --------
Management service fees 7,292 7,107 1,464 1,349 8,756 8,456
Corporate-owned offices 725 481 586 540 1,311 1,021
------------------------------ -------- -------- -------- -------- -------- --------
8,017 7,588 2,050 1,889 10,067 9,477
------------------------------ -------- -------- -------- --------
Initial franchise fees
and other resale commissions 176 198
Other income 476 468
------------------------------ -------- -------- -------- -------- -------- --------
Franchise property division 10,719 10,143
------------------------------ -------- -------- -------- -------- -------- --------
Commission receivable
on financial services 8,533 3,290
------------------------------ -------- -------- -------- -------- -------- --------
Financial services division 8,533 3,290
------------------------------ -------- -------- -------- -------- -------- --------
Total revenue 19,252 13,433
------------------------------ -------- -------- -------- -------- -------- --------
Gross profit for the two divisions is split as follows:
Gross profit
------------------
2019 2018
GBP'000 GBP'000
---------------------------- -------- --------
Property franchise division 10,719 10,143
Financial services division 2,497 1,187
---------------------------- -------- --------
Total gross profit 13,216 11,330
---------------------------- -------- --------
4 Cost of sales and administrative expenses
Group
Cost of sales and administrative expenses (non-exceptional) by
nature:
2019 2018
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Staff costs 5,220 4,559
Depreciation 336 127
Amortisation 471 454
Marketing 423 326
Auditor's remuneration
- Fees payable to the Company's auditor for the audit
of the Company's annual accounts 58 53
- Tax compliance services 12 16
- Statutory audit of subsidiaries - 45
Operating lease expenditure - 247
Other cost of sales and administrative expenses 7,072 2,892
------------------------------------------------------ -------- --------
13,592 8,719
------------------------------------------------------ -------- --------
5 Share-based payments
Administrative expenses includes a charge of GBP187,000 (2018:
GBP189,000) after valuation of the Company's employee share options
schemes in accordance with IFRS 2 'Share-based payments'. Under
this standard, the fair value of the options at the grant date is
spread over the vesting period. These items have been added back in
the statement of changes in equity.
6 Exceptional items
Group
A total of GBPnil (2018: credit of GBP640,000) in relation to
exceptional items in the year arose from:
2019 2018
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Transaction costs on acquisition - 104
Restructuring costs - 65
------------------------------------------------------- -------- --------
Exceptional administration costs - 169
Reduction in fair value to contingent consideration of
Northwood - (809)
------------------------------------------------------- -------- --------
- (640)
------------------------------------------------------- -------- --------
7 Dividends
Group
2019 2018
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Final dividend for 2018
3.8p per share paid 26 May 2019 (2018: 3.5p per share
paid 31 May 2018) 1,328 1,223
Interim dividends for 2019
3.4p per share paid 24 October 2019 (2018: 3.4p per share
paid 2 November 2018) 1,188 1,188
---------------------------------------------------------- -------- --------
Total dividend paid 2,516 2,411
---------------------------------------------------------- -------- --------
As a prudent measure due to the uncertainty caused by the
Covid-19, the Directors have decided not to propose a final
dividend for 2019.
8 Earnings per share
Group
Earnings per share is calculated by dividing the profit for the
financial year by the weighted average number of ordinary shares in
issue during the year. The calculation of diluted earnings per
share is derived from earnings per share, adjusted to allow for the
issue of shares under these instruments.
2018
2019 GBP'000
GBP'000 As restated
------------------------------------------- -------- ------------
Profit for the financial year 4,652 4,500
------------------------------------------- -------- ------------
Weighted average number of ordinary shares Number Number
------------------------------------------- -------- ------------
Basic 34,939 34,939
Diluted 35,934 35,727
------------------------------------------- -------- ------------
Earnings per share Pence Pence
------------------------------------------- -------- ------------
Basic 13.3p 12.9p
Diluted 12.9p 12.6p
------------------------------------------- -------- ------------
9 Leases
Group
Right-of-use assets
Motor Office
Property vehicles equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- --------- ---------- --------
At 1 January 2019 587 48 3 638
Additions - 173 - 173
Amortisation (112) (81) (2) (195)
-------------------- -------- --------- ---------- --------
At 31 December 2019 475 140 1 616
-------------------- -------- --------- ---------- --------
Lease liabilities
Motor Office
Property vehicles equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- --------- ---------- --------
At 1 January 2019 587 48 3 638
Additions - 173 - 173
Interest expense 16 5 - 21
Lease payments (121) (89) (2) (212)
-------------------- -------- --------- ---------- --------
At 31 December 2019 482 137 1 620
-------------------- -------- --------- ---------- --------
Maturity of lease liabilities
Up to 6 Over 5
months 6-12 months 1-5 years years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- ----------- --------- -------- --------
Lease liabilities 91 87 437 5 620
------------------- -------- ----------- --------- -------- --------
10 Cash and cash equivalents
Group Company
------------------ ------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- --------
Cash and cash equivalents 3,586 1,798 1,412 214
-------------------------- -------- -------- -------- --------
11 Borrowings
Group Company
------------------ ------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- --------
Current
Bank loans - term loan 861 925 861 925
----------------------- -------- -------- -------- --------
Long term
Bank loans - term loan 9,591 10,452 9,591 10,452
----------------------- -------- -------- -------- --------
10,452 11,377 10,452 11,377
----------------------- -------- -------- -------- --------
All current amounts are short term and their carrying values are
considered reasonable approximations of fair value.
12 Maturity of borrowings
2019 2018
GBP'000 GBP'000
---------------------------------------- -------- --------
Group and Company
Repayable in less than six months 587 658
Repayable in seven to twelve months 581 572
---------------------------------------- -------- --------
Current portion of long-term borrowings 1,168 1,230
Repayable in years one to five 10,181 11,279
---------------------------------------- -------- --------
Total borrowings 11,349 12,509
Less: interest included (897) (1,132)
---------------------------------------- -------- --------
Total debt 10,452 11,377
---------------------------------------- -------- --------
Less: cash and cash equivalents (3,585) (1,798)
---------------------------------------- -------- --------
Net debt 6,867 9,579
---------------------------------------- -------- --------
Borrowings comprise a term loan of GBP10,537,000 (2018:
GBP11,475,000) secured by a fixed and floating charge over the
Group assets and is repayable in half yearly instalments of
GBP445,000 from June 2020 with a final payment of GBP7,868,000 in
March 2023 and bears interest at 1.95% over the LIBOR rate. The
arrangement fee of GBP144,000 is being amortised over the life of
the loan, which gave rise to a charge to the profit and loss
account of GBP29,000 (2018: GBP22,000). All bank covenants were
complied with throughout the year.
13 Reconciliation of profit before taxation to cash generated
from operations
Group
2019 2018
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Profit before taxation 5,580 5,480
Depreciation and amortisation charges (including
impairment) 819 581
Share-based payment charge 187 189
Impairment of franchisee loan book 158 272
Impairment on sale of Newton Fallowell Newark
trade and assets - 88
Loss/(profit) on disposal of corporate offices (2) 15
Changes in fair value to contingent consideration - (809)
Amortisation of debt costs 29 52
Finance costs 321 226
Interest paid on lease liabilities 21 -
Finance income (230) (265)
MAB share option recognition and related
income (32) (87)
--------------------------------------------------- -------- --------
6,851 5,742
(Increase)/decrease in trade and other receivables (145) (1,393)
Increase/(decrease) in trade and other payables 579 1,263
--------------------------------------------------- -------- --------
Cash generated from operations 7,285 5,612
--------------------------------------------------- -------- --------
14 Deferred taxation
Group
2019 2018
GBP'000 GBP'000
------------------------------------------- -------- --------
Balance at 1 January 1,647 1,744
Acquisition in the year - attributable
to intangible assets 48 38
(Credited)/charged to the income statement (255) (135)
---------------------------------------------- -------- --------
Balance at 31 December 1,440 1,647
---------------------------------------------- -------- --------
Deferred taxation has been provided as
follows:
Attributable to intangible assets 1,623 1,658
Accelerated capital allowances 47 59
Recognition of deferred tax asset (230) (70)
---------------------------------------------- -------- --------
1,440 1,647
------------------------------------------- -------- --------
Amounts provided in respect of deferred tax are computed at 17%
(2018: 17%). There are no temporary differences for which deferred
tax balances are unrecognised.
15 Prior year restatement
The Directors have decided to restate the following items:
Unearned indemnity commission
In prior years the liability to unearned indemnity commission
net of amounts recoverable from financial advisers was treated as
an accrual which was offset by an amount recoverable from the
financial advisor. The liability and asset are due to and from
different counterparties and should not be offset. This has been
restated to recognise the gross unearned indemnity commission as a
refund liability and the amount recoverable from the financial
advisers within other debtors.
Deferred tax on acquired intangibles
The Group has not previously released the deferred tax liability
in line with amortisation on acquired intangibles. The deferred tax
liability has been restated to reflect the accumulative effect of
GBP219,000 as at 1 January 2018 and a further GBP82,000 in
2018.
Deferred tax asset on share options
The Group has not previously recognised the deferred tax asset
associated with share-based payments. The deferred tax asset has
been restated to reflect the accumulative effect of GBP26,000 as at
1 January 2018 and a further GBP44,000 in 2018.
16 Post balance sheet events
Lovelle acquisition
Newton Fallowell Limited, a wholly owned subsidiary, acquired
the trade and assets of the estate agency business operated by
Lovelle Estate Agency Limited and Lovelle Bacons LLP (collectively
referred to as "Lovelle") on 6 and 20 January 2020 respectively.
This transaction meets the definition of a business combination and
will be accounted for using the acquisition method under IFRS
3.
The combined consideration of GBP2m was settled in cash post
year end and comprises around GBP100,000 in tangible assets and the
remainder being intangible assets and goodwill.
At the time that the financial statements have been authorised
for issue the initial accounting for this business combination is
incomplete. As such the full disclosure of this business
combination cannot be made at this time.
Covid-19
Whilst trading in the year to date had been in line with
management expectations, as a result of Covid-19, in accordance
with Government guidelines, the Group closed its corporate offices
on 24 March and the franchise and financial services offices have
been advised to do likewise. In operating a franchise business
model, the Group bears none of the costly infrastructure of a large
corporate network and the Board has sought to manage the impact on
short term financial performance by reviewing overheads to remove
non-critical costs and reducing headcount to match the foreseeable
needs of the business whilst retaining key skills and
infrastructure necessary to support franchisees and advisers. In
addition, the Board, brand managing directors and senior managers
have volunteered to take a temporary salary reduction.
Despite the resilience of the core lettings business, the Group
will not be immune to the effects of reduced levels of property
sales and mortgage transactions, and the higher risk of bad debts
and non-payment of rent and it will have a significant impact on
trading for the 2020 year. Careful consideration has been given to
short term cash flow and, as detailed in note 1 under the basis of
preparation, the directors are satisfied that based on a range of
scenarios the business will continue to operate within bank
covenants. Based on longer term expectations for the business the
directors are satisfied that revisions to cash flow forecasts
caused by this non-adjusting post-balance sheet event would not
lead to a material change to the carrying value of non-current
assets or liabilities. This assessment is based on the headroom in
the impairment reviews of intangible assets, which are sufficient
to absorb significant downwards sensitivities in short-term
trading. Increased short- to medium-term economic uncertainty is
also likely to lead to an increase in expected credit loss
provisions on financial assets, although this is not expected to
materially affect short term receivables recognised at the year
end.
17 Posting of accounts
It is intended that the financial statements for the year ended
31 December 2019 will be made available to shareholders on the
company's website www.belvoirgroup.com by 15 April 2020 and will
also be available thereafter at the registered office, The Old
Courthouse, 61a London Road, Grantham, NG31 6HR.
18 Annual General Meeting
The Annual General Meeting will be held at 10am on 21 May 2020
at the registered office, The Old Courthouse, 61a London Road,
Grantham, NG31 6HR
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KKCBDCBKDCNB
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