TIDMBLV
RNS Number : 0493V
Belvoir Group PLC
12 April 2021
12 April 2021
BELVOIR!
BELVOIR GROUP PLC
(the "Company", the "Group" or "Belvoir")
Statement of audited Final Results for the year ended 31
December 2020
Resilient business model delivers another year of strong
growth
Belvoir Group PLC (AIM: BLV), one of the UK's largest property
franchise groups, is pleased to announce its Final Results for the
year ended 31 December 2020.
Financial highlights
-- Group revenue increased by 13% to GBP21.7m (2019: GBP19.3m)
with 6% attributable to the acquisition of Lovelle
-- Management Service Fees (MSF), the Group's core income from
franchisees, grew by 3% to GBP9.1m (2019: GBP8.8m)
-- 20% increase in profit before tax to GBP6.7m (2019: GBP5.6m),
marking 24 years of consecutive profit growth
-- Strong lettings bias reflected in gross profit ratio of 60%
lettings: 17% sales: 19% financial services: 4% other (2019:
61%:16%:19%:4%)
-- Year-end cash increased noticeably to GBP5.9m (2019: GBP3.6m)
-- Net debt significantly reduced to GBP3.7m (2019: GBP6.9m)
despite deploying GBP2.0m to acquire Lovelle
-- Progressive dividend policy reinstated with total dividend
for the year of 7.2p (2019: 6.7p including the catch-up final
dividend of 3.3p) and dividend cover of 2.1x
-- Full repayment of the GBP260,000 Government Covid-19
financial support received under the Coronavirus Job Retention
Scheme and small business grants
Operational highlights
-- Achieved growth across all three markets: lettings, sales and
financial services, despite Covid-19 disruption
-- Entered into strategic alliance with The Nottingham Building
Society now with 11 dual-branded branches
-- Franchised out all five of the Lovelle corporate-owned offices by January 2021
-- Exceeded the 200 financial advisers milestone ending the year on 202 (2019: 166)
-- Successfully progressed the strategic goal of pairing
financial advisers and franchisees, with 141 of the Group's
agencies now offering financial services through a Brook financial
adviser (2019: 95)
-- Expanded number of offices to 418 (2019: 396)
Post period end acquisition
-- Earnings enhancing acquisition of the Nicholas Humphreys
network of 18 franchise and 3 corporate-owned estate and lettings
agencies for GBP4.0m in cash, adding around GBP2.8m of revenue and
GBP1.0m of operating profit p.a.
Dorian Gonsalves, Chief Executive Officer, commented:
"Whilst the property sector was adversely affected by Covid-19
lockdowns, when it reopened in May following the first lockdown,
demand across both sales and lettings was exceptionally strong and
fuelled further still by the Government's announcement of the stamp
duty holiday in July 2020. The recent Budget announcement of an
extension of the higher stamp duty thresholds through to the end of
September 2021, albeit at a lower level from July, will do much to
stimulate housing transactions further in 2021.
"Our franchise model proved its resilience once again. The
entrepreneurial spirit of our franchisees and advisers ensured that
they made the most of the market opportunities as soon as the
property sector opened up and started moving again. Through a
combination of strong trading in H2 and a reduction in overheads as
we entered the pandemic, the Group was able to achieve a
performance during 2020 that exceeded the Board's pre-Covid-19
expectations.
"Alongside organic growth, Belvoir's acquisition strategy
continues to focus on investing in successful businesses that
either expand our franchise footprint or introduce additional
revenue streams to our franchisees, where there is scope for
greater growth as part of the Group. 2020 saw the Belvoir Group
enter into a strategic alliance with the Nottingham Building
Society announced in July 2020 and more recently we added Nicholas
Humphreys to our franchise network. The Board continues to identify
suitable targets that meet its acquisition criteria and which can
deliver healthy returns on investment."
For further details:
Belvoir Group PLC 01476 584900
Dorian Gonsalves, Chief Executive Officer investorrelations@belvoirgroup.com
Louise George, Chief Financial Officer
www.belvoirgroup.co m
finnCap
Julian Blunt & Teddy Whiley (Corporate Finance)
Tim Redfern (ECM)
www.finncap.com +44 (0) 20 7220 0500
Buchanan +44 (0) 20 7466 5000
Charles Ryland, Kim Looringh-van Beeck
& Tilly Abraham
Notes for editors:
About Belvoir Group PLC
Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir
operates a nationwide property franchise group with 439 offices
across six brands specialising in residential lettings, property
management, residential sales and property-related financial
services. With its Central Office in Grantham, Lincolnshire, the
Group manages over 71,000 properties and reported record revenues
of GBP21.7m in 2020 marking Belvoir's 24(th) year of unbroken
profit growth.
For further information, please visit: www.belvoirgroup.com
Chairman's statement
In a year of managing the business through the unprecedented
times of Covid-19, as a Board, we have had to act quickly and
decisively in adapting to Government guidelines whilst ensuring our
staff, and our franchisees, financial advisers and their staff,
remained safe at all times.
Performance
In 2020 Belvoir achieved its 24(th) year of uninterrupted profit
growth which, when considering the challenges of lockdowns and
economic uncertainty, is a tremendous result. Revenue increased by
an impressive 13%, with both our property franchise and our
financial services divisions holding up remarkably well, achieving
growth of 12% and 14% respectively. Profit before tax increased 20%
to GBP6.7m (2019: GBP5.6m), up GBP1.1m.
The Group now operates through 418 individual businesses
comprising 318 (2019: 313) estate and lettings offices and 100
(2019: 83) financial services businesses. We continue to help
franchisees with their strategic growth through our assisted
acquisitions programme and by encouraging greater diversity into
sales and financial services. Our network of financial advisers
exceeded its milestone of 200 advisers, ending 2020 with 202 (2019:
166) advisers, up 22%.
Board and senior management
Belvoir continues to benefit from the loyalty, longevity and
stability of its highly skilled Board and senior managers in
providing unrivalled knowledge and experience. Their measured
approach prevailed throughout 2020, achieving an exceptional set of
results in uncertain times.
Governance
The Board applies the 2018 Quoted Companies Alliance Corporate
Governance Code (the "QCA Code") as the basis of the Group's
governance framework. We continue to promote a culture of good
governance and we recognise how important our people are to the
success of the Group.
Covid-19
At the start of the pandemic, the Board took the necessary steps
to safeguard shareholder value by mitigating the potential
shortfall in income through a thorough review of our cost base.
Measures taken included the temporary furloughing of 22% of our
workforce, all of whom have now returned to work, and an agreed
senior staff temporary salary reduction. The Board was extremely
grateful to employees for the sacrifices made during this period of
uncertainty and to the Government for its Covid-19 financial
support as these measures enabled the Group to retain staff during
this very difficult period. Given the Group's resilient trading
during 2020, we ensured that all staff were fully reimbursed for
the salaries which were sacrificed. Also, recognising our wider
stakeholders, the Board took the socially responsible decision to
repay in full to the Government the GBP260,000 received under the
Coronavirus Job Retention Scheme and small business grants.
Dividends
Having suspended the 2019 final dividend due to uncertainty at
the start of the Covid-19 lockdown, the Board subsequently
reinstated its progressive dividend policy and paid a catch-up
dividend of 2.0p together with the 2020 interim dividend of 3.4p
(2019: 3.4p). I am pleased to confirm that the Board is proposing a
further catch-up dividend of 1.3p per share to coincide with the
final 2020 dividend of 3.8p. This represents a total dividend for
the year of 7.2p (2019: 6.7p including the reinstated final
dividend of 3.3p).
Outlook
Trading in the year to date has been encouraging and in line
with management expectations. The lettings market remains resilient
as demonstrated throughout the pandemic. The sales and financial
services markets are expected to remain buoyant following the
extension of the stamp duty holiday until 30 September, and will be
boosted further by the recent Government's announcement of a new
95% mortgage guarantee scheme.
Whilst the successful roll out of the current vaccination
programme provides "light at the end of the tunnel" in terms of
pandemic restrictions, the Board is mindful of the uncertainty over
the longer-term implications for the economy. However, having
traded successfully through 2020 and given the Government's
initiatives to support the housing market, the Board has confidence
in the resilience of the business model and the strength of the
balance sheet.
Finally, I would like to thank all our franchisees, advisers and
staff for their contribution in achieving such a strong set of
results in 2020 and for their support during the Covid-19 crisis.
Our people have played a pivotal role in ensuring that they kept,
as best they could, a "business as usual service" to all their
vendors, borrowers, buyers, landlords and tenants alike.
Michael Stoop
Non-Executive Chairman
Chief Executive Officer's statement
Responsive and resilient
- Dorian Gonsalves, Chief Executive Officer
2020 was a rollercoaster of a year with the Group being quick to
respond to the changing circumstances and proving once again the
resilience of the Belvoir business model, with a strong performance
from the property franchise and financial services divisions
alike.
Performance
The Group exceeded its pre-Covid-19 expectations with revenue
increasing 13% to GBP21.7m (2019: GBP19.3m), of which 6% was
attributable to the acquired Lovelle network comprising twelve
franchised and five corporate-owned branches. Of the underlying
business, our property division was up 2% and our financial
services division was up 14%, demonstrating that both successfully
overcame the challenges faced by the pandemic, particularly during
the first lockdown when the sector was all but closed from 25 March
to 13 May.
Management Service Fees ("MSF"), the Company's core income from
franchisees, was up 3% to GBP9.1m (2019: GBP8.8m). The first
national lockdown had minimal impact on lettings MSF, which
increased by 2%, due to the strong recurring nature of this revenue
stream. Meanwhile the more significant impact on sales MSF was
partially mitigated by the exceptional recovery in house
transactions in Q4 stimulated by the stamp duty holiday, which
together with the acquisition of the Lovelle estate agency
franchise network, helped sales MSF to achieve 9% growth.
The Group's diversification into financial services has
continued to deliver growth with revenue from this division up
GBP1.2m to GBP9.7m (2019: GBP8.5m) and gross profit up GBP0.3m to
GBP2.8m (2019: GBP2.5m). As with estate agency, the financial
services market was adversely impacted by the first national
lockdown, but the shortfall in new mortgage products was partially
mitigated by shifting the focus to remortgages and life protection
products. The surge in house sales in H2 provided a significant
boost to the mortgage market, resulting in record levels of
commission from mortgages in Q4.
Despite Covid-19, all three markets continued to grow in 2020
with lettings up 10%, sales up 21% and financial services up 14%,
demonstrating the resilience of the Belvoir franchise business
model. Belvoir now has a portfolio of 65,065 (2019: 63,975) managed
properties, and in 2020 Group house sales were up 8% to 8,003
(2019: 7,433) and the number of mortgages arranged was up 29% to
12,094 (2019: 9,342). The Group's network revenue, being the total
revenue across all our Group companies, our franchisees and our
financial advisers, totalled GBP96m (2019: GBP93m).
Covid-19
During 2020 our focus was on the safety of our staff and other
stakeholders as well as on safeguarding the business. We invested
in Covid-19 safety measures and implemented a rota to reduce staff
numbers in our offices at any one time. Staff who are able to carry
out their jobs from home did so throughout most of 2020 and from 13
May our corporate-owned branches operated on a locked door basis,
accessible to members of the public by appointment only. Our
franchisees and financial advisers followed similar safety
procedures and demonstrated that they were able to operate
effectively having embraced digital practices that minimised
face-to-face contact.
In March 2020 we launched our franchisee financial support
package which included a six-month capital repayment holiday to
franchisees who had borrowed funds from Belvoir under our assisted
acquisitions programme and the waiver of monthly minimum fees so
that MSF payable by franchisees were wholly percentage based. These
two measures reduced payments from franchisees by GBP0.5m between
April and September 2020 giving those franchisees most severely
affected by the pandemic some much needed financial flexibility.
During the year we delivered 86 free training webinars, providing
valuable advice on how our franchisees and advisers could operate
safely within Government guidelines and how to maximise the
opportunities from a buoyant sales market.
Our strategic priorities
Our growth strategy continues to focus on investing in
successful businesses that either expand our franchise footprint or
introduce additional revenue streams to our franchisees, and where
there is scope for greater growth as part of the Belvoir Group.
This has been demonstrated by the acquisition of five additional
franchise networks to the Belvoir Group since 2015, the latest
being the acquisition of Nicholas Humphreys in March 2021, and the
acquisition of two financial services businesses to provide the
platform for our growing financial services division. The Board
will continue to identify suitable targets that meet its
acquisition criteria, deliver healthy returns on investment and are
earnings enhancing.
Having launched the assisted acquisitions programme at the end
of 2013, in 2020 the Belvoir Group reached the milestone of its
100(th) assisted acquisition having orchestrated eleven (2019: 24)
such deals in 2020. Although temporarily disrupted by Covid-19 with
less appetite from both buyers and sellers to transact, we have
seen renewed interest from our franchisees and more opportunities
coming back to the market in 2021.
The Group has made progress in its strategic goal of pairing
financial advisers and franchisees, with 141, around 45%, of the
Group's agencies now offering financial services through a Brook
financial adviser, up from 95 at the end of 2019. Clearly, there is
further opportunity to roll out to the remaining Group offices as
the financial services network continues to grow towards its
objective of achieving full coverage across the UK.
A highlight of 2020 was entering into a strategic alliance with
The Nottingham Building Society, which has seen Belvoir's
established network of franchisees, trading under the brands
Belvoir, Northwood, Newton Fallowell and Lovelle, extending their
estate agency and lettings services to eleven co-branded existing
building society branches. We expect this relationship to present
further opportunities in 2021.
Creating value
The Group's continued success in acquiring and assimilating
additional franchise and financial services businesses alongside
organic growth in our networks has helped to deliver an increase of
over 175% in profit before tax to GBP6.7m (2016: GBP2.4m) and 165%
in EPS to 15.1p (2016: 5.7p) over four years.
Our marketplace
The property sector was one of the first to be "unlocked" and
since reopening, pent-up demand, fuelled further in July by the
temporary reduction in stamp duty, gave rise to a surge of activity
that continued throughout the remainder of the year. As a result,
and contrary to predictions at the outset of the pandemic of a
property market collapse, the number of house transactions in 2020
fell by only 11% and the house price index increased by 8.5% in
2020 whilst the rental index was up 1.4%.
2021 started with unusually high pipelines of agreed sales and
approved mortgages with a drive to get transactions completed
before stamp duty bands returned to the normal levels, the
timescales for which were extended to September in the UK
Government's recent Budget. Also announced in the Budget, the
Government's 95% mortgage guarantee scheme will do much to meet the
pent-up demand from first-time buyers, who were locked out of the
market by the withdrawal of high loan-to-value mortgage lending in
2020.
Outlook
Whilst we are confident that the business will continue to
operate effectively given the Government's policies to keep the
housing sector moving, we are also hopeful that the successful roll
out of the Covid-19 vaccine will see the return of some semblance
of normality and stability in 2021, which will further benefit the
Group and its markets.
Dorian Gonsalves
Chief Executive Officer
Financial review
Providing clear guidance
- Louise George, Chief Financial Officer
In what was a difficult year to forecast, we aimed to give clear
guidance throughout the year, ultimately delivering a strong set of
financial results.
Revenue
Group revenue in 2020 increased by GBP2.4m to GBP21.7m (2019:
GBP19.3m), of which GBP1.1m reflected the acquisition of Lovelle in
January 2020 and GBP1.3m arose from growth in the underlying
business.
MSF, our key underlying revenue stream from franchisees,
increased by 3% to GBP9.1m (2019: GBP8.8m) with lettings MSF up 2%
to GBP7.5m (2019: GBP7.3m) and MSF from property sales up 9% to
GBP1.6m (2019: GBP1.5m). Our Covid-19 financial support package for
franchisees included the waiver of our monthly minimum fees to
franchisees which reduced total MSF income in 2020 by GBP0.1m.
Income from corporate-owned offices was up GBP0.9m, which
resulted from the acquisition of the Lovelle network comprising
five corporate-owned offices. As stated at the time of acquisition,
it was the Board's intention to find a franchise solution for these
offices. All but one was franchised during the year with Lovelle
Grimsby Lettings being franchised mid-January 2021. Of these, four
were sold to the respective branch managers and one was rebranded
to Newton Fallowell. Also in 2020 we resold the Northwood Glossop
portfolio, which had been brought back in-house in 2019, to an
adjacent franchisee. As a result, revenue from these offices has
been reported as GBP0.9m from assets held for sale. Going forward,
the contribution from these offices will be in the form of MSF and
reported as part of our continuing operations. 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.
Revenue from franchise sales in 2020 was GBP0.3m (2019:
GBP0.2m). We opened seven (2019: six) new offices in 2020, of which
five resulted from an existing franchise owner opening an
additional office, one from a conversion by an independent agent
and one from an assisted acquisition by a new franchise owner. We
also saw three (2019: eight) existing franchisees sell their
business to a new franchise owner and four Lovelle corporate-owned
offices being acquired by an existing franchisee or the branch
manager.
Other income was relatively unchanged at GBP0.4m (2019:
GBP0.5m).
Overall, our property division achieved 12% revenue growth with
the ratio of lettings to sales at 78:22 (2019: 80:20) with the
slight shift towards sales reflecting the acquisition of Lovelle, a
predominantly estate agency network.
Revenue from our financial services division was up 14% to
GBP9.7m (2019: GBP8.5m) resulting from the expansion of our
network; this increased by 66 advisers to 202 (2019: 166) with over
70% of the recruitment achieved in the second half of the year.
Gross profit
Gross profit increased by 12% to GBP14.8m (2019: GBP13.2m) with
the gross profit ratio by business activity, lettings 60%, sales
17%, financial services 19% and other 4% (2019: 61%:16%:19%:4%),
reflecting the significant bias towards our recurring lettings
income stream.
Administrative expenses
Administrative expenses increased by GBP0.6m to GBP8.2m (2019:
GBP7.6m) including GBP0.9m of additional costs associated with the
Lovelle acquisition. This comprised GBP0.8m incurred operating five
Lovelle corporate-owned estate and lettings agencies, and GBP0.06m
amortisation charge in respect of the associated acquired
intangibles.
Within administrative expenses there is a charge of GBP0.4m
(2019: GBP0.2m) associated with the share options issued to
Directors and certain staff between 2014 and 2020.
The underlying Belvoir business reported overheads savings of
GBP0.5m resulting from a reduction in headcount at the start of the
pandemic to match foreseeable needs, home-based working, travel
limited to essential only, negotiated discounts from suppliers on
services during the lockdown that benefited both the Group and our
franchisees and general tight cost control.
In H1 overheads were reduced by GBP0.3m as a result of a
voluntary lockdown salary reduction for senior personnel and
Government Covid-19 financial support through the Coronavirus Job
Retention Scheme and small business grants. All staff were
reimbursed and all furlough monies and grants were repaid to the
Government in H2.
Operating profit
Operating profit was GBP6.6m (2019: GBP5.7m), an increase of 17%
over the prior year.
Other income
In May 2020, options over 40,000 shares in Mortgage Advice
Bureau, an AIM-listed company, vested. These were sold during the
year and a gain of GBP0.1m was recognised in other income.
Profit before taxation
Profit before taxation of GBP6.7m (2019: GBP5.6m) is after
interest receivable on franchisee loans of GBP0.2m (2019: GBP0.2m),
which is regarded by the Group as part of its ongoing operations to
extend the network reach.
Taxation
The effective rate of corporation tax for the year was 20.3%
(2019: 16.6%). The higher rate of effective tax is in part due to
the Government's decision to maintain corporation tax at 19% rather
than reduce to 17% as reflected in deferred tax calculations at the
end of 2019.
Earnings per share
Basic earnings per share was up 14% to 15.1p (2019: 13.3p) based
on an average number of shares in issue in the year of 35,100,979
(2019: 34,938,606). When the dilutive effect of share options is
incorporated, the earnings per share was 14.6p (2019: 12.9p).
Profit attributable to owners was GBP5.3m (2019: GBP4.7m).
Dividends
Following the Board's prudent decision to suspend the 2019 final
dividend at the start of the Covid-19 lockdown, the Board
reinstated its progressive dividend policy at the time of the 2020
interim results. The interim dividend of 5.4p (2019: 3.4p), which
was paid to shareholders on 30 October 2020, included 2.0p as a
partial reinstatement of the final dividend for 2019.
The Board is proposing a final dividend for 2020 of 5.1p per
share (2019: nil) which includes a further catch-up dividend of
1.3p per share and brings the total reinstated 2019 final dividend
to 3.3p per share. Subject to shareholders' approval at the AGM on
27 May 2021, this dividend will be paid on 1 June 2021, based upon
the register on 23 April 2021. The ex-dividend date is 22 April
2021.
In total, the 2020 dividend for the year will be 7.2p (2019:
6.7p including the catch-up final dividend of 3.3p) with dividend
cover at 2.1x. The Board aims to offer a reliable and growing
income stream to investors whilst retaining sufficient funds for
further investment to meet its strategic growth objectives.
Cash flow
The Group continues to achieve a high conversion of cash from
operations with cash of GBP8.2m from operating activities at 110%
of EBITDA (2019: 113%). The net cash inflow from operations was
GBP6.8m (2019: GBP6.0m) reflecting the enlarged Group.
The net cash used in investing activities was GBP1.4m (2019:
GBP0.3m):
-- Newton Fallowell Limited acquired the trade and assets of the
Lovelle network which comprised five corporate-owned offices and
twelve franchised offices, for GBP2.0m cash consideration.
-- Proceeds from the sale of corporate offices held for resale was GBP0.2m.
-- The cash outflow of franchisee loans granted was GBP0.7m
(2019: GBP1.2m) and reflects the lower level of assisted
acquisitions activity in 2020.
-- The cash inflow from repayments to the franchise loan book
was GBP0.8m (2019: GBP1.4m). Our financial support package for
franchisees included a six-month capital repayment holiday to those
franchisees who have borrowed funds from Belvoir to grow through
our assisted acquisitions programme. This reduced cash inflow by
GBP0.4m.
-- Interest received on the franchise loan book was GBP0.2m (2019: GBP0.2m).
-- Proceeds from the sale of shares in MAB was GBP0.3m
During 2020 GBP0.9m (2019: GBP0.9m) was repaid against the HSBC
loan and associated finance costs were GBP0.3m (2019: GBP0.3m).
Dividend payments totalled GBP1.9m (2019: GBP2.5m). As a result,
net cash outflow from financing activities totalled GBP3.1m (2019:
net cash outflow of GBP4.0m).
Liquidity and capital resources
At the year end the Group had cash balances of GBP5.9m (2019:
GBP3.6m) and a term loan of GBP9.6m (2019: GBP10.5m). 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. Bank
covenants are set at dividend cover of greater than 4.0 and the
debt service ratio at greater than 1.2, within which the business
is forecast to operate with substantial headroom.
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 GBP1.3m (2019: GBP1.2m).
-- Revenue is reduced 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 GBP1.3m (2019:
GBP1.1m).
-- 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 GBP0.5m (2019:
GBP0.4m).
Post-year-end acquisition
In March 2021 the Group acquired White Kite Holdings 2021
Limited, the holding company of White Kite Limited and Nicholas
Humphreys Franchise Limited, which together operate "Nicholas
Humphreys", a predominantly franchised lettings network of 18
franchised and three corporate-owned offices operating nationwide.
The overall consideration for the acquisition was GBP4.0m which was
satisfied in cash from existing cash reserves. In the year to 31
March 2020 Nicholas Humphreys, as acquired, recorded revenue of
GBP2.8m and operating profit of GBP1.0m and at that date had net
assets of approximately GBP0.1m.
Going concern
The Group continues to operate from a sound financial platform
and is strongly cash generative. The opening cash balance of
GBP5.9m enabled the Group to acquire the Nicholas Humphreys network
in March 2021 for cash. Whilst the Group has demonstrated excellent
resilience during the Covid-19 pandemic, the Board has nonetheless
revisited its forecasts against a range of possible downside
outcomes and 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.
Key performance indicators
The Group uses a number of key financial and non-financial
performance indicators to measure performance, which are regularly
reviewed by the Board to ensure that they remain relevant to the
Group's operations.
Louise George
Chief Financial Officer
Group statement of comprehensive income
For the financial year ended 31 December 2020
2020
2020 GBP'000 2020 2019
GBP'000 Operations GBP'000 GBP'000
from assets
Continuing held for Continuing
Notes operations sale Total operations
------------------------------------------ ----- ----------- ------------ -------- -----------
Revenue 3 20,759 933 21,692 19,252
Cost of sales (6,896) - (6,896) (6,036)
------------------------------------------ ----- ----------- ------------ -------- -----------
Gross profit 13,863 933 14,796 13,216
Administrative expenses (7,377) (792) (8,169) (7,556)
------------------------------------------ ----- ----------- ------------ -------- -----------
Operating profit 6,486 141 6,627 5,660
Finance costs (261) - (261) (342)
Finance income 181 - 181 230
Other income 123 - 123 32
------------------------------------------ ----- ----------- ------------ -------- -----------
Profit before taxation 6,529 141 6,670 5,580
Taxation (1,326) (27) (1,353) (928)
------------------------------------------ ----- ----------- ------------ -------- -----------
Profit and total comprehensive income
for the financial year 5,203 114 5,317 4,652
------------------------------------------ ----- ----------- ------------ -------- -----------
Profit for the year attributable to the
equity holders of the parent company 5,203 114 5,317 4,652
------------------------------------------ ----- ----------- ------------ -------- -----------
Earnings per share attributable to equity
holders of the parent company
Basic 6 15.1p 13.3p
Diluted 6 14.6p 12.9p
------------------------------------------ ----- ----------- ------------ -------- -----------
The accompanying notes form an integral part of these condensed
consolidated financial statements.
Statements of financial position
As at 31 December 2020
Group
-------------------------------------- ----- ------------------
2020 2019
Notes GBP'000 GBP'000
-------------------------------------- ----- -------- --------
Assets
Non-current assets
-------------------------------------- ----- -------- --------
Intangible assets 29,942 29,069
Investments - -
Financial assets - 159
Property, plant and equipment 511 593
Right-of-use assets 455 616
Trade and other receivables 1,970 2,053
-------------------------------------- ----- -------- --------
32,878 32,490
Current assets
-------------------------------------- ----- -------- --------
Trade and other receivables 5,063 4,575
Assets held for sale 7 591 -
Cash and cash equivalents 5,934 3,586
-------------------------------------- ----- -------- --------
11,588 8,161
-------------------------------------- ----- -------- --------
Total assets 44,466 40,651
-------------------------------------- ----- -------- --------
Liabilities
Non-current liabilities
-------------------------------------- ----- -------- --------
Lease liabilities 289 442
Interest-bearing loans and borrowings 8,728 9,591
Deferred tax liability 1,446 1,440
-------------------------------------- ----- -------- --------
10,463 11,473
Current liabilities
-------------------------------------- ----- -------- --------
Trade and other payables 3,849 3,141
Lease liabilities 175 178
Interest-bearing loans and borrowings 861 861
Corporation tax liability 821 711
-------------------------------------- ----- -------- --------
5,706 4,891
-------------------------------------- ----- -------- --------
Total liabilities 16,169 16,364
-------------------------------------- ----- -------- --------
Total net assets 28,297 24,287
-------------------------------------- ----- -------- --------
Equity
Shareholders' equity
-------------------------------------- ----- -------- --------
Share capital 351 349
Share premium 12,150 12,006
Share-based payments reserve 968 524
Revaluation reserve 162 162
Merger reserve (5,774) (5,774)
Retained earnings 20,440 17,020
-------------------------------------- ----- -------- --------
Total equity 28,297 24,287
-------------------------------------- ----- -------- --------
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 2020
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
2019 349 12,006 337 162 (5,774) 14,884 21,964
Changes in equity
Issue of equity
share capital - - - - - - -
Share-based payments 4 - - 187 - - - 187
Dividends 5 - - - - - (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
Issue of equity
share capital 2 144 - - - - 146
Share-based payments 4 - - 444 - - - 444
Dividends 5 - - - - - (1,897) (1,897)
----------------------- ----- -------- -------- ----------- ----------- -------- ------------ ------------
Transactions with
owners 2 144 444 - - (1,897) (1,307)
Profit and total
comprehensive income
for the financial
year - - - - - 5,317 5,317
----------------------- ----- -------- -------- ----------- ----------- -------- ------------ ------------
Balance at 31 December
2020 351 12,150 968 162 (5,774) 20,440 28,297
----------------------- ----- -------- -------- ----------- ----------- -------- ------------ ------------
The accompanying notes form an integral part of these condensed
consolidated financial statements.
Statements of cash flows
For the financial year ended 31 December 2020
Group
-------- --------
2020 2019
Notes GBP'000 GBP'000
---------------------------------------- ----- -------- --------
Operating activities
---------------------------------------- ----- -------- --------
Cash generated from/(used in) operating
activities 8 8,198 7,285
Tax paid (1,379) (1,237)
---------------------------------------- ----- -------- --------
Net cash flows generated from/(used
in) operating activities 6,819 6,048
Investing activities
---------------------------------------- ----- -------- --------
Acquisitions net of cash acquired 9 (2,039) (338)
Sale of assets held for sale 7 176 -
Deferred and contingent consideration (37) (243)
Capital expenditure on property,
plant and equipment (46) (99)
Disposal of corporate offices 25 54
Franchisee loans granted (653) (1,242)
Loans repaid by franchisees 758 1,380
Finance income received 181 230
Sale of MAB share options 271 -
Dividends received - -
---------------------------------------- ----- -------- --------
Net cash flows (used in)/generated
from investing activities (1,364) (258)
Financing activities
---------------------------------------- ----- -------- --------
Proceeds from share issue 146 -
Loan repayments (890) (938)
Equity dividends paid (1,897) (2,516)
Lease payments (222) (212)
Finance costs (244) (336)
---------------------------------------- ----- -------- --------
Net cash used in financing activities (3,107) (4,002)
---------------------------------------- ----- -------- --------
Net change in cash and cash equivalents 2,348 1,788
Cash and cash equivalents at the
beginning of the financial year 3,586 1,798
---------------------------------------- ----- -------- --------
Cash and cash equivalents at the
end of the financial year 5,934 3,586
---------------------------------------- ----- -------- --------
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 2020
1 Approval
This announcement was approved by the Board of Directors on 9
April 2021.
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
While the financial information included in this annual
financial results announcement has been prepared in accordance with
the recognition and measurement principles of International
Accounting Standards in conformity of the requirements of the
Companies Act 2006, this announcement does not contain sufficient
information to comply therewith.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2020
or 2019 but is derived from those accounts. Statutory accounts for
the year ended 31 December 2019 have been delivered to the
Registrar of Companies and those for the year ended 31 December
2020 will be delivered following the Company's annual general
meeting.
The auditors have reported on those accounts; their reports were
unqualified and did not include references to any matters to which
the auditors drew attention by way of emphasis without qualifying
their reports. Their reports for the year end 31 December 2020 and
31 December 2019 did not contain statements under s498 (2) or (3)
of the Companies Act 2006.
Going concern and Covid-19
The ongoing impact of the Covid-19 pandemic has been considered
by the Directors in light of the operating resilience demonstrated
by the business during 2020, the expectation that all UK Covid-19
restrictions will have been lifted by mid-June and concerns over
the possible long-term impact on the wider economy. The Directors
have revised the forecasts for the Group taking into account the
potential ongoing impact of Covid-19 on trading over the twelve
months from the date of signing the financial statements.
Sensitivities have been applied to the base case model to reflect
the possibility of an ongoing lockdown scenario with minimal impact
on lettings income and moderately lower levels of income from sales
and mortgage activity but no reduction in headcount or other
overheads and no change in terms of business with franchisees.
Under all scenarios, which incorporate the acquisition of Nicholas
Humphreys for cash, there is substantial headroom above that needed
to continue operating within the banking facilities and in
compliance with covenants.
Furthermore, a reverse stress test has been carried out against
the base case model which demonstrates that, even without changing
other parameters such as overheads and dividend payments, it would
require a very substantial reduction in revenue, inconsistent with
the recurring revenue nature of the business model, for the bank
covenants to be breached.
After consideration of these forecasts and making appropriate
enquiries, the Directors have a reasonable expectation that the
Group will be able to continue in operation and meet its
liabilities as they fall due.
Standards adopted for the first time
There are no new or revised standards effective for annual
periods beginning on or after 1 January 2020.
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 2020 relevant
to the Group. After Brexit, the UK will continue to apply
International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
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 2020 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 segments are 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
------------------ ------------------ ------------------
2020 2019 2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- -------- -------- -------- -------- --------
Management service fees 7,467 7,292 1,589 1,464 9,056 8,756
Corporate-owned offices 1,360 725 890 586 2,250 1,311
------------------------------ -------- -------- -------- -------- -------- --------
8,827 8,017 2,479 2,050 11,306 10,067
------------------------------ -------- -------- -------- -------- -------- --------
Initial franchise fees
and other resale commissions 242 176
Other income 449 476
------------------------------ -------- -------- -------- -------- -------- --------
Franchise property division 11,997 10,719
------------------------------ -------- -------- -------- -------- -------- --------
Commission receivable
on financial services 9,695 8,533
------------------------------ -------- -------- -------- -------- -------- --------
Financial services division 9,695 8,533
------------------------------ -------- -------- -------- -------- -------- --------
Total revenue 21,692 19,252
------------------------------ -------- -------- -------- -------- -------- --------
Revenue from corporate-owned offices of GBP2,250,000 includes
GBP933,000 relating to five Lovelle corporate-owned offices and the
Northwood Glossop portfolio that were held as assets for sale
pending being franchised out. This comprises GBP578,000 of lettings
revenue and GBP355,000 of sales revenue.
Gross profit for the two divisions is split as follows:
Gross profit
------------------
2020 2019
GBP'000 GBP'000
---------------------------- -------- --------
Property franchise division 11,997 10,719
Financial services division 2,799 2,497
---------------------------- -------- --------
Total gross profit 14,796 13,216
---------------------------- -------- --------
4 Share-based payments
Administrative expenses include a charge of GBP444,000 (2019:
GBP187,000) 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.
5 Dividends
Group
2020 2019
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Final dividend for 2019
No final dividend was paid for 2019 (2019: 3.8p per share
paid 26 May 2019) - 1,328
Interim dividend for 2020
5.4p per share paid 30 October 2020 (2019: 3.4p per share
paid 24 October 2019) 1,897 1,188
---------------------------------------------------------- -------- --------
Total dividend paid 1,897 2,516
---------------------------------------------------------- -------- --------
In March 2020, the Board decided that it would be prudent not to
recommend a final dividend for the financial year ended 31 December
2019 given the uncertainty caused by Covid-19. The 2020 interim
dividend of 5.4p included a catch-up of 2.0p against the suspended
final 2019 dividend.
The Directors propose a final dividend of 5.1p per share
totalling GBP1,796,000 for 2020, payable 1 June 2021, to
shareholders on the register on 23 April 2021 . As this remains
conditional on shareholders' approval, provision has not been made
in these financial statements. This includes a further catch-up of
1.3p, giving a total of 3.3p against the suspended final 2019
dividend.
6 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.
2020 2019
GBP'000 GBP'000
------------------------------------------- -------- --------
Profit for the financial year 5,317 4,652
------------------------------------------- -------- --------
Weighted average number of ordinary shares Number Number
------------------------------------------- -------- --------
Basic 35,101 34,939
Diluted 36,314 35,934
------------------------------------------- -------- --------
Earnings per share Pence Pence
------------------------------------------- -------- --------
Basic 15.1p 13.3p
Diluted 14.6p 12.9p
------------------------------------------- -------- --------
7 Assets held for sale
Group
Total
GBP'000
-------------------- --------
Additions 767
Disposals (176)
-------------------- --------
At 31 December 2020 591
-------------------- --------
The acquisition of Lovelle included five corporate-owned offices
that have been held for resale. During the year the Horncastle
office was franchised to the adjacent Newton Fallowell franchisee,
and Hessle, Skegness and Grimsby Sales were franchised to the
respective branch managers. Total consideration was GBP176,000 in
respect of these disposals. On 15 January 2021, the remaining
Grimsby Lettings office was franchised to the branch manager for
GBP591,000.
8 Reconciliation of profit before taxation to cash generated
from operations
Group
2020 2019
GBP'000 GBP'000
------------------------------------------------ -------- --------
Profit before taxation 6,670 5,580
Depreciation and amortisation charges 843 819
Share-based payment charge 444 187
Impairment of franchisee loan book 68 158
Profit on disposal of corporate offices - (2)
Amortisation of debt costs 29 29
Finance costs 244 321
Interest paid on lease liabilities 17 21
Finance income (181) (230)
MAB share option recognition and related income (112) (32)
------------------------------------------------ -------- --------
8,022 6,851
Increase in trade and other receivables (569) (145)
Increase in trade and other payables 745 579
------------------------------------------------ -------- --------
Cash generated from operations 8,198 7,285
------------------------------------------------ -------- --------
9 Acquisitions
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,
for cash consideration of GBP2,007,000. Lovelle comprised a network
of twelve franchised estate agencies and five corporate-owned
estate and lettings agencies. The corporate-owned offices were
franchised out by 15 January 2021 as planned, and these have been
recognised at their net realisable value of GBP767,000, which is
not materially different to the consideration as at
acquisition.
The goodwill represents the value attributable to the new
businesses and the assembled and trained workforce.
Deferred tax at 19% has been provided on the value of intangible
assets defined as customer contracts. No tax relief is available on
the brand, the goodwill or the master franchise agreement acquired.
Whilst the initial book value of goodwill is higher than the tax
base, no deferred liability is accounted for and any subsequent
impairments should be treated as permanent differences for tax and
have no impact on deferred tax. The value of the acquired master
franchise is amortised over 25 years. An initial deferred tax
liability is recognised and reduced subsequently in line with
amortisation creating a deferred tax credit.
During the year a further GBP8,000 was paid in respect of the
Northwood Glossop portfolio.
Under the strategic alliance entered into with The Nottingham
Building Society (NBS), Belvoir Property Management (UK) Limited
acquired a small portfolio of managed properties for total
consideration of GBP24,000.
The above transactions met the definition of a business
combination and have been accounted for using the acquisition
method under IFRS 3. The assets and liabilities below are shown at
their provisional fair values as at acquisition.
NW Glossop NBS Lovelle Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------- -------- -------- --------
Intangible assets 8 24 802 834
Assets held for sale - - 767 767
Deferred tax liabilities - - (151) (151)
--------------------------------- ---------- -------- -------- --------
Identifiable net assets acquired 8 24 1,418 1,450
--------------------------------- ---------- -------- -------- --------
Goodwill on acquisition - - 589 589
--------------------------------- ---------- -------- -------- --------
Consideration 8 24 2,007 2,039
--------------------------------- ---------- -------- -------- --------
Consideration settled in cash 8 24 2,007 2,039
--------------------------------- ---------- -------- -------- --------
Post-acquisition financial results
The acquisition of Lovelle was sufficiently close to the start
of the year such that had completion taken place on the first day
of the financial year, Group revenues and Group profit before tax
would have been unaffected. The five corporate-owned offices were
categorised as assets held for sale and as such operations from
these five offices has been reported as separately on the face of
the Group statement of comprehensive income.
The acquisitions of the NW Glossop and NBS portfolios were
immaterial to the Group results.
10 Post balance sheet events
Acquisition of Nicholas Humphreys
On 31 March 2021, Belvoir Group PLC acquired the entire share
capital of White Kite Holdings 2021 Limited and its two
subsidiaries, White Kite Limited and Nicholas Humphreys Franchise
Limited, collectively referred to as Nicholas Humphreys.
Nicholas Humphreys, operates a national network of 18 franchised
and three corporate-owned primarily lettings agencies. 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 GBP4.0m was settled in cash from
existing reserves post year end and comprises around GBP100,000 in
tangible assets with 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.
11 Posting of accounts
It is intended that the financial statements for the year ended
31 December 2020 will be made available to shareholders on the
company's website www.belvoirgroup.com by 22 April 2021 and will
also be available thereafter at the registered office, The Old
Courthouse, 60a London Road, Grantham, NG31 6HR.
12 Annual General Meeting
The Annual General Meeting will be held at 10am on 27 May 2021
at the registered office, The Old Courthouse, 60a London Road,
Grantham, NG31 6HR
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