TIDMBLV
RNS Number : 2305U
Belvoir Group PLC
27 March 2023
27 March 2023
BELVOIR GROUP PLC
(the "Company", the "Group" or "Belvoir")
Final Results for the year ended 31 December 2022
Diversified model continues to deliver strong growth
Belvoir Group PLC (AIM: BLV), a leading UK multi-brand property
franchise and financial services group , is pleased to announce its
audited Final Results for the year ended 31 December 2022.
The diversified and acquisitive nature of the Group ensured that
Belvoir continued to grow and resulted in a 26(th) year of unbroken
profit growth and an increased total dividend, despite 2022
following on from the strongest year for the property sector in
recent history.
Financial highlights
-- Group revenue increased 14% to GBP33.7m (2021: GBP29.6m) with
12% attributable to acquired businesses
-- Management service fees (MSF) grew by 2% to GBP11.0m (2021: GBP10.7m)
-- Profit before tax was just 2% lower at GBP9.1m (2021:
GBP9.3m), but profit after tax was marginally ahead making 2022 a
26(th) year of unbroken profit growth
-- Continued strong lettings bias reflected in gross profit
ratio of 56% lettings, 16% sales, 23% financial services, 5% other
(2021: 56%, 19%, 20% and 5%)
-- Administrative costs up 16% to GBP11.2m (2021: GBP9.7m) with
10% reflecting the increased size of the Group and 6% attributable
to inflationary pressures
-- The Group continued to be highly cash generative with 107%
(2021: 100%) of EBITDA converting to operating cash of GBP10.8m
(2021: GBP10.3m)
-- Year-end cash of GBP3.2m (2021: GBP7.4m) despite deploying
GBP4.0m on two corporate acquisitions
-- Debt significantly reduced by GBP6.7m to GBP2.0m (2021:
GBP8.7m) leaving the Group in a net cash position of GBP1.2m (2021:
net debt of GBP1.3m)
-- Increased total dividend per share for the year up 6% to 9.0p (2021: 8.5p)
Operational highlights
-- Acquired Mr and Mrs Clarke, a personal estate agency business
operating through ten partners, in March 2022 for GBP0.05m
-- Acquired The TIME Group, a network of 63 financial services
advisers, in May 2022 for GBP4.5m
-- Expanded Belvoir's mortgage adviser network by 17% to 284 (2021: 243(1) )
-- Operating from 487 (2021: 426) locations, up 14%, giving greater reach nationwide
-- Doubled the number of assisted acquisitions to 14 (2021: 7)
deals on behalf of franchisees, adding GBP3.9m (2021: GBP1.2m) to
their annual revenue, equating to around 4% in total franchise
network revenue
-- Managed portfolio up 4% to 75,500 (2021: 72,900) properties
-- Number of written mortgages up 11% to 18,329 (2021: 16,585)
-- Number of house sales down 11% to 10,970 (2021: 12,320),
compared with 15% decline in UK house transactions
Dorian Gonsalves, Chief Executive Officer, commented:
"2022 was a much stronger year for the property market than many
analysts had forecast. However, the mini budget in September
crystallised the general pressure on interest rates and created
significant uncertainty in the financial markets, which in turn
impacted on sales instructions and mortgage applications in Q4 of
2022. Whilst we have seen a bounce-back in our mortgage activity
for the year to date, up around 20% on Q4 2022, with house
transactions taking up to five months to complete from agreeing a
purchase, the increased market activity so far in Q1 will take
until H2 to flow through to our financial performance.
"The entrepreneurial character of our franchisees and financial
services advisers means that they strive to make the most of the
opportunities presented in all market conditions. Our property
franchisees benefit from the strong recurring lettings fees earned
from their managed property portfolios, and our financial advisers
are able to draw on their extensive bank of clients who are looking
to remortgage.
"Despite challenging market conditions, we remain confident that
the resilience and diversity of our business model and multi-brand
strategy will enable the Group to perform well against the market
as a whole during 2023 and beyond. With the Group now debt-free and
given the cash-generative nature of our operations, the Board has
increased the dividend by 6% to 9p and will look to identify
suitable acquisition targets to support continued growth and
further enhance shareholder value."
Retail investor presentation
Dorian Gonsalves, CEO, and Louise George, CFO, will present live
to retail investors reporting on the Group's final results via the
Investor Meet Company platform today at 4.30pm. Investors can sign
up for free and register to participate via:
https://www.investormeetcompany.com/belvoir-group-plc/register-investor
(1) Excludes Nottingham Building Society dual-branded
branches
For further details:
Belvoir Group PLC 01476 584 900
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, Charlotte Sutcliffe (ECM)
www.finncap.com +44 (0) 20 7220 0500
Buchanan +44 (0) 20 7466 5000
Charles Ryland, Jack Devoy, George
Cleary
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 487 offices
across seven brands specialising in residential lettings, property
management, residential sales and property-related financial
services. With its Central Office in Grantham, Lincolnshire, the
Group manages 75,500 properties and reported record revenues of
GBP33.7m in 2022 marking Belvoir's 26 (th) year of unbroken profit
growth.
For further information, please visit: www.belvoirgroup.com
Chairman's statement
I am delighted to be reporting on another successful year for
the Belvoir Group, my first as both a Non-Executive Director and
then from October 2022, as Chairman. It gives me great pride to
have been asked to take on the responsibility of chairing a Group
made up of so many talented and dedicated people and I firmly
believe that Belvoir has a lot to look forward to in the years
ahead.
Overview of performance
Belvoir Group is reporting another exceptional year of financial
performance despite the market uncertainty caused by the
cost-of-living crisis in the wake of both the war in Ukraine and
the pandemic, and exacerbated further by the mini-budget in
September 2022 and successive interest rate rises. The Group has
developed a strategy to protect against such impacts with a
diversified approach to its network of property franchises and the
ability to balance revenue from both lettings and sales alongside
our expanding network of financial services advisers.
Total revenue increased by 14% to GBP33.7m (2021: GBP29.6m)
which was achieved on the back of a 37% increase the year before.
Group profit before tax was marginally lower at GBP9.1m (2021:
GBP9.3m) but this is still ahead of management's expectations given
that 2021 was an exceptional year due to the recovery of the market
post Covid.
Cash generation and acquisition strategy
The Group continued to be highly cash generative and, despite
spending GBP4.0m on acquisitions in the year, is reporting a net
cash position as at 31 December 2022 of GBP1.2m (2021: net debt of
GBP1.3m). This is an excellent platform from which to assess
further strategic acquisitions in 2023. The Board remains focused
on identifying opportunities of all sizes to enhance our
diversified business model and to drive additional management
service fees by adding to our portfolio of highly respected
franchised brands.
Dividends
The Board is pleased to announce a 6% increase in our total
dividend to 9.0p per share (2021: 8.5p). Accordingly, the final
dividend for 2022 will be 5.0p per share and this will be payable
on 22 May 2023 to all shareholders on the register at the close of
business on 11 April 2023 subject to shareholders' approval on 18
May 2023.
Corporate Governance
The Board promotes a culture of good governance and we continue
to apply the 2018 Quoted Companies Alliance Corporate Governance
Code (the "QCA Code") as the basis of the Group's governance
framework.
Sustainability and ESG
Sustainability and other environmental, social and governance
matters are at the forefront of the Board's agenda and form an
important consideration in our day-to-day trading and our strategy
for the future.
The Board has commissioned external consultants to help the
Group achieve a carbon neutral position in 2024 and to set a plan
in place for moving towards full net zero in the years ahead. The
management team recognises the current climate crisis and, whilst
our operations do not cause significant direct harm to the
environment, there is a lot the Group can do to minimise carbon
emissions and our indirect impact.
The Board also remains committed to its social impact and
particularly looking after its employees, franchisees and financial
services advisers. The Group will continue to provide extensive
support to its franchisees and advisers as they represent the
engine of the business. During the year we have also undertaken a
staff survey for our direct employees and acted upon that to
introduce a range of new benefits including a health cash plan, a
new cycle-to-work scheme and birthday leave, aimed at improving
staff wellbeing and making sure they enjoy working for the
Group.
I would like to take this opportunity to recognise everyone
involved in the Belvoir Group for their wonderful individual
contributions and for their continued commitment to serving our
customers. Therefore, on behalf of the Board, thank you to our
employees, our franchisees, our financial advisers and our wider
network of customers, suppliers and other friends of the Group. Our
success is dependent on each and every one of you.
Board changes
I would like to pass on the gratitude of the entire Belvoir
Group leadership team to our previous Chairman, Michael Stoop, who
stood down in September 2022. Michael is a hard act to follow with
his extensive knowledge of franchising and his committed approach
to governance and the management of the Board. The Board thanks him
for his four and a half years of service and wishes him well for
the future.
Outlook
Although the market uncertainty seen towards the end of 2022
will continue to have some impact during the first half of 2023,
the Group has started the year well and the Board is positive about
its medium to longer term growth trajectory. We have the financial
strength to invest in more acquisitions and we are committed to
this strategy where it adds value to the Group. I look forward to
leading the Board through 2023 and to the opportunities the year
will bring us.
Jon Di-Stefano
Non-Executive Chairman
Chief Executive Officer's statement
Overview of performance
Group revenue increased by 14% to GBP33.7m (2021: GBP29.6m),
marking another record year. The housing sector performed better in
2022 than many commentators had forecast at the start of the year,
with UK residential sales transactions down 15% on 2021, but around
6% ahead of pre-pandemic levels, house prices rising by 9.3% and
rents across all tenancies were up by 4.2%. Meanwhile, the mortgage
market saw an increase in remortgages which softened the impact of
the fall in activity associated with new house purchase
mortgages.
Like-for-like revenue growth was 2%. During the year the Belvoir
Group extended its reach through the acquisitions of TIME Mortgage
Services ("TIME"), which expanded the Group network of mostly
self-employed financial services advisers, and Mr and Mrs Clarke
("MMC"), which provided a platform from which to develop Belvoir's
personal estate agency franchise model. As a result, the Group
achieved a further 12% growth from its corporate acquisition
strategy.
Revenue from the financial services division increased by 26% to
GBP18.1m (2021: GBP14.4m), of which like-for-like growth was 4%.
The Group's network of advisers expanded by 41 advisers to 284
(2021: 243), with the acquisition of TIME enabling greater
penetration of the Northwest. As demand for new purchase mortgages
fell back reflecting the lower level of activity in the residential
sales market, our advisers benefitted from their extensive client
books with demand for remortgages increasing as interest rates
started to rise. This shift was reflected in our ratio of
remortgages to new purchase mortgages moving to 50:50 (2021:
33:67), albeit fees earned from remortages run at around 70% of new
purchase mortgages.
Our franchise business continued to be underpinned by
substantial recurring lettings income. With a stronger lettings to
sales ratio of 77:23 (2021: 74:26), revenue from the property
division was up 2% to GBP15.6m (2021: GBP15.2m). Management service
fees (MSF), the key underlying return from franchisees, were up 2%
for the year to GBP11.0m (2021: GBP10.7m) and revenue from
corporate-owned offices was down 2% to GBP3.5m (2021: GBP3.6m)
having franchised out the Nicholas Humphreys Burton office in
September 2022 in line with our franchising strategy.
Lettings revenue increased by 5% to GBP11.2m (2021: GBP10.7m),
of which like-for-like growth was 4%. Whilst rents on new tenancies
were up 11% by the end of the year, this will take time to roll
through to all rental properties as landlords cannot increase the
rent mid-tenancy and many choose not to do so until there is a
change of tenant. Higher rents on new lets acted as a deterrent to
some renters considering moving, which impacted on the fees charged
to landlords on a change of tenancy.
Sales revenue was lower by 10% to GBP3.3m (2021: GBP3.7m), with
the like-for-like movement down 15%. Sales MSF from the underlying
business fell by just 9% reflecting a stronger performance from our
franchisees when compared with our corporate-owned offices, and
indeed to the market as a whole, down 15%, demonstrating the power
of our franchising model. Our traditional lettings franchise
brands, Belvoir and Northwood, which have been building their
residential sales business in previous years, reported a fall in
sales revenue of just 4%.
The Group's highly successful assisted acquisitions strategy
regained momentum following two years of subdued activity due to
Covid-19. Franchisees completed on 14 (2021: 7) assisted
acquisitions, which added GBP3.9m (2021: GBP1.2m) to their annual
revenue and equates to around 4% in annual franchise network
revenue against which Belvoir charges MSF. With a strong pipeline
of assisted acquisitions at the start of the year, our expectation
is that this level of franchise-led acquisition activity will be
built on further in 2023.
Group house sales in 2022 were down 11% to 10,970 (2021: 12,320)
as anticipated given the strong market in 2021, the number of
mortgages arranged by Belvoir's advisers was up 11% to 18,329
(2021: 16,585) supported by an increased adviser base and the
Belvoir Group now manages a portfolio of 75,500 (2021: 72,900)
properties. The Group's network revenue, being the total revenue
across all our Group companies, our franchisees and our advisers,
totalled GBP121m (2021: GBP112m).
Our strategic priorities
The Group continued to identify suitable growth opportunities
that complement its existing business model. The acquisition of
TIME, an established Mortgage Advice Bureau appointed
representative, extended the Group's network of financial advisers
to support both our franchisees at a local level, as well as
servicing leads from independent agents. The strategic aim is to
achieve greater penetration of financial services to the Group's
client base for the benefit of both individual franchisees and the
Group as a whole.
The acquisition of Mr and Mrs Clarke provided the Group with a
new service offering, which will recognise the breadth of ways in
which customers want to interact with their estate agent and the
different ways in which potential new franchisees or partners want
to operate. This network will require further investment in order
to build momentum and the Group intends to relaunch the Mr and Mrs
Clarke brand at franchise exhibitions later this year. A
combination of its strong branding and the expertise and
credibility that the Belvoir Group can bring, will only strengthen
the business' growth potential.
At a franchise level, we remain committed to enabling
franchisees to grow their businesses under our assisted
acquisitions growth strategy. This is primarily focused on
franchisees acquiring the lettings book from a local competitor
which has a strong recurring lettings stream. Since 2014, we have
supported 126 such transactions which have been an important part
of an average MSF per office increase of 68% to GBP33,500 (2014:
GBP20,000) over the same period.
Creating value
Over the past eight years, the Group has acquired ten businesses
that met its strategic investment criteria funded primarily by debt
or from cash reserves. The Group is highly cash generative and at
the end of 2022 was operating in a net cash position for the first
time since 2016. The Board intends to continue its successful
growth strategy both at a franchise level, under its assisted
acquisitions programme, and at a corporate level in identifying
suitable acquisition targets with the aim of further enhancing
shareholder value.
Our marketplace
2022 was a surprisingly good year for the property market,
despite the impact of the cost-of-living crisis. Few expected
property prices to continue rising with house price inflation
year-on-year at 9.3% (2021: 10.8%) or transaction numbers to fall
by just 15%. Despite the significant number of house purchases in
2021, there remained an unsatisfied surplus demand that supported
continued sales activity through most of 2022, with 1.26 million
(2021: 1.48 million) households buying a new home. At this level of
transactions, 2022 was second only to 2021 in the last 15
years.
Meanwhile, rental inflation remains high, outstripping wage
growth, with rents on new lets up 10.8% in 2022. Tenant demand is
not being met by new landlord instructions and so the upward
pressure on rents continues. The renters reform bill is coming
downstream in 2023 and short-term changes in the proposed
legislation include the abolishment of Section 21 'no-fault'
evictions, a new single ombudsman and once-a-year rent increases.
With increasing regulation of the private rental sector, the
opportunity for professional lettings agents is to assist the 50%
of private landlords who are currently self-managing.
The mini budget in September 2022 created a high degree of
uncertainty within the property and related financial services
markets, with base rates doubling from 1.75% to 3.5% between August
and December. This led to a rapid rise in mortgage lending rates,
the withdrawal of many mortgage products by lenders and a
tightening of mortgage criteria. This impacted the market in two
ways. Firstly, borrowers with pre-existing mortgage offers, which
locked in lower interest rates, were keen to complete on their
house purchases before their offer expired, resulting in the level
of fall-through of transactions in Q4 being relatively low.
Secondly, instruction levels for house sales and demand for
mortgages in Q4 2022 were adversely affected, down 36% and 32%
respectively, with less appetite for making a significant financial
commitment on a new house purchase or remortgaging at a higher cost
until there was some clarity on Government economic policy and its
impact on mortgage rates.
Outlook
The Autumn Statement reversed many of the fiscal initiatives
proposed in the mini budget, which somewhat reassured borrowers and
lenders. This has seen a return to the market of many mortgage
products with strong competition between lenders pushing mortgage
rates back down. At the same time, the reduction in house prices
since August has helped to improve affordability. As a result, the
level of sales instructions and mortgage applications to date in
2023 have shown signs of improvement, up 9% and 21% respectively,
compared with Q4 2022. Given the lead time from instruction to
completion of a house sale and from mortgage application to
drawdown can be up to five months, the improvement in activity so
far in H1 is not likely to flow through into financial performance
until H2.
The Group's franchise business model is underpinned by its
property franchisees and financial services advisers who are highly
motivated entrepreneurs and demonstrate the ability to make the
most of the opportunities presented in all market conditions. Our
property franchisees benefit from significant recurring lettings
revenue that contributes around 56% of Group gross profit and our
financial services advisers have substantial client books from
which to offer remortgages and other financial products, so are not
entirely reliant on new mortgage business.
The Board is confident that the resilience and diversity of
Belvoir's business model will enable the Group to perform well
against the market as a whole in 2023 and beyond, despite the
current challenging market conditions.
Dorian Gonsalves
Chief Executive Officer
Financial review
Revenue
Group revenue in 2022 increased by GBP4.1m to GBP33.7m (2021:
GBP29.6m). Corporate acquisitions and disposals added net GBP3.6m,
whilst revenue on a like-for-like basis increased by GBP0.5m.
Revenue from the financial services division increased by
GBP3.7m to GBP18.1m (2021: GBP14.4m), of which GBP0.5m was on a
like-for-like basis and GBP3.2m arose from the full-year ownership
of Brook Mortgage Services, acquired on 30 July 2021 and the
acquisition of TIME on 23 May 2022.
Revenue from the property division was up GBP0.4m to GBP15.6m
(2021: GBP15.2m). Income streams in the property division comprise:
management services fees (MSF), these being our key underlying
revenue stream from franchisees; revenue generated by
corporate-owned offices; franchise sales, which include fees
charged to franchisees joining the Group and renewal fees from
existing franchisees; and other fees.
Within the underlying property business, growth in lettings of
GBP0.4m and in franchise fees of GBP0.1m mitigated the reduction in
revenue from sales of GBP0.6m as the property market normalised.
The additional GBP0.4m of property revenue was the net impact of
the acquisition of Mr and Mrs Clarke Limited on 10 March 2022, the
full years ownership of White Kite Group 2021 Limited, which was
acquired on 31 March 2021 and trades as Nicholas Humphreys, and the
franchising of the Nicholas Humphreys Burton office, previously
corporate-owned, in September 2022.
MSF increased by GBP0.3m to GBP11.0m (2021: GBP10.7m) with
GBP0.2m arising from Mr and Mrs Clarke and the full-year ownership
of the Nicholas Humphreys network. Lettings MSF were up GBP0.4m to
GBP8.6m (2021: GBP8.2m), of which GBP0.3m arose from the underlying
network. MSF from property sales were down GBP0.2m to GBP2.3m
(2021: GBP2.5m), having benefitted from GBP0.1m of additional sales
MSF from the Mr and Mrs Clarke network.
Income from corporate-owned offices was down GBP0.1m with a
shortfall in sales revenue of GBP0.3m being mitigated by an
increase of GBP0.1m from lettings and of GBP0.1m from the full year
ownership of the Nicholas Humphreys network.
Revenue from franchise sales in 2022 was up GBP0.2m to GBP0.5m
(2021: GBP0.3m). Six (2021: seven) new franchise owners were
recruited to our traditional high street brands and six to our
personal agency model operating as Mr and Mrs Clarke.
Other income was unchanged at GBP0.6m (2021: GBP0.6m).
The table below details revenue growth/(reduction) on a
like-for-like basis and the net impact of acquisitions and the
franchising out of the corporate office in 2022*. See note 3 for
further segmental information.
Impact of 2022 Total
Like-for-like acquisitions & growth
Revenue growth table 2021 basis disposals 2022 %
MSF
Lettings GBP8.2m GBP0.3m 3% GBP0.1m 2% GBP8.6m 5%
Sales GBP2.5m (GBP0.2m) (9%) GBP0.1m 3% GBP2.3m (6%)
-------- --------- ----- ------------ ---- -------- -------
Total MSF GBP10.7m GBP0.1m 0% GBP0.2m 2% GBP11.0m 2%
-------- --------- ----- ------------ ---- -------- -------
Corporate office income
Lettings GBP2.4m GBP0.1m 5% GBP0.0m 0% GBP2.6m 6%
Sales GBP1.2m (GBP0.3m) (29%) GBP0.1m 10% GBP1.0m (19%)
-------- --------- ----- ------------ ---- -------- -------
Total corporate office
income GBP3.6m (GBP0.2m) (6%) GBP0.1m 4% GBP3.5m (2%)
-------- --------- ----- ------------ ---- -------- -------
Lettings (MSF and corporate) GBP10.7m GBP0.4m 4% GBP0.1m 1% GBP11.2m 5%
Sales (MSF and corporate) GBP3.7m (GBP0.6m) (15%) GBP0.2m 5% GBP3.3m (10%)
Franchise sales and
other income GBP0.9m GBP0.1m 17% GBP0.1m 7% GBP1.1m 24%
-------- --------- ----- ------------ ---- -------- -------
Property division GBP15.2m GBP0.0m 0% GBP0.4m 2% GBP15.6m 2%
Financial services
division GBP14.4m GBP0.5m 4% GBP3.2m 22% GBP18.1m 26%
-------- --------- ----- ------------ ---- -------- -------
Total Group revenue GBP29.6m GBP0.5m 2% GBP3.6m 12% GBP33.7m 14%
-------- --------- ----- ------------ ---- -------- -------
* In the above table, the numbers presented are rounded and the
percentages are calculated from the more precise numbers detailed
in note 3 Segmental information. As a result of the rounding,
whilst the amounts and percentages are accurate movements, they
might not add across.
Gross profit
Gross profit increased by GBP1.3m to GBP20.3m (2021: GBP19.0m)
with the gross profit ratio by business activity being lettings
56%, sales 16%, financial services 23% and other 5% (2021:
56%:19%:20%:5%), continuing to demonstrate the significant bias
towards our recurring lettings income stream.
The lower gross profit margin from financial services of 26%
(2021: 27%) reflected the addition of the TIME advisers which
increased the proportion of self-employed advisers who are paid a
higher share of mortgage commission than employed advisers but are
responsible for their own administrative costs.
Administrative expenses
Administrative expenses increased by GBP1.5m to GBP11.2m (2021:
GBP9.7m). Incremental overheads of GBP1.0m resulted from operating
the acquired businesses. The remaining increase of GBP0.5m in the
underlying overheads reflects additional staff costs of GBP0.4m and
general overheads of GBP0.1m associated with being fully back to
normal operations post Covid-19 and inflationary pressures.
Operating profit
Operating profit was at GBP9.0m (2021: GBP9.3m), 3% down on the
prior year.
Profit before taxation
Profit before taxation of GBP9.1m (2021: GBP9.3m) is after
interest receivable on franchisee loans of GBP0.2m (2021: 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 18.8%
(2021: 20.6%). The higher effective rate in 2021 reflected changes
to the deferred tax asset and deferred tax on intangibles resulting
from the increase in corporation tax to 25% which will take effect
from April 2023.
Earnings per share
Basic earnings per share was down 2% to 19.9p (2021: 20.4p)
based on an average number of shares in issue in the year of
37,292,000 (2021: 36,142,000). When the dilutive effect of share
options is incorporated, the earnings per share was 19.6p (2021:
20.3p).
Profit attributable to owners was GBP7.4m (2021: GBP7.4m).
Dividends
The Board is proposing a final dividend for 2022 of 5.0p per
share (2021: 4.5p). Subject to shareholders' approval at the AGM on
18 May 2023, this dividend will be paid on 22 May 2023, to
shareholders on the register on 11 April 2023. The ex -- dividend
date is 6 April 2023.
In total, the 2022 dividend for the year will be 9.0p (2021:
8.5p) with dividend cover at 2.2x. 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
operating activities with 107% (2021: 100%) of EBITDA converting
into cash of GBP10.8m (2021: GBP10.3m). The net cash inflow from
operations was GBP9.6m (2021: GBP8.6m) reflecting the enlarged
Group.
The net cash used in investing activities was GBP3.4m (2021:
GBP3.5m):
-- On 23 September 2022 the sale of the Nicholas Humphreys
Burton corporate office generated proceeds of GBP0.7m.
-- On 10 March 2022 the Company acquired the entire share
capital of Mr and Mrs Clarke Ltd for GBP0.05m cash consideration,
net of cash acquired.
-- On 23 May 2022 Brook Financial Services Ltd acquired the
entire share capital of The TIME Group for GBP4.0m cash
consideration, net of cash acquired.
-- The cash outflow of franchisee loans granted was GBP0.9m
(2021: GBP0.8m) with the level of assisted acquisitions activity
recovering following two years in which such activity was impacted
by Covid-19.
-- The cash inflow from repayments to the franchise loan book was GBP0.8m (2021: GBP1.0m).
-- Interest received on the franchise loan book was GBP0.2m (2021: GBP0.2m).
During 2022 GBP6.8m (2021: GBP0.9m) was repaid against the HSBC
loan and associated finance costs were GBP0.2m (2021: GBP0.2m). A
further GBP0.2m (2021: GBP0.2m) was paid in lease costs. Dividend
payments totalled GBP3.2m (2021: GBP3.3m of which GBP0.5m was a
catch-up of the suspended final 2019 dividend payment). As a
result, net cash outflow from financing activities totalled
GBP10.4m (2021: GBP3.6m).
Liquidity and capital resources
At the year end the Group had cash balances of GBP3.2m (2021:
GBP7.4m) and a term loan of GBP2.0m (2021: GBP8.7m). The HSBC loan
facility was fully repaid on 1 March 2023. Given the cash
generative nature of the business, as demonstrated by our ability
in recent years to fund acquisitions in cash alongside repaying
substantial bank debt, the Group has put in place an overdraft
facility of GBP1.0m to provide the appropriate flexibility to meet
any short-term cash requirements.
Unearned indemnity commission
Associated with our growing financial services division is the
accounting treatment of unearned indemnity commission. This
comprises three elements, the net effect of which is GBP0.6m (2021:
GBP0.7m):
-- 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 GBP2.0m (2021: GBP1.6m).
-- 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 GBP2.1m (2021:
GBP1.5m).
-- Also, on a weekly basis the estimated clawback of commission
recoverable from our advisers is accounted for within other
debtors. At the year end this balance was GBP0.7m (2021:
GBP0.6m).
Financial position
The Group continues to operate from a sound financial platform
with net assets of GBP38.1m (2021: GBP33.6m), with the main change
being the additional intangible assets arising from the
acquisitions of The TIME Group Ltd and Mr and Mrs Clarke Limited,
which were funded from existing cash reserves.
Louise George
Chief Financial Officer
Group statement of comprehensive income
For the financial year ended 31 December 2022
2022 2021
Notes GBP'000 GBP'000
-------------------------------------------------- ----- -------- --------
Revenue 3 33,718 29,647
Cost of sales (13,449) (10,602)
-------------------------------------------------- ----- -------- --------
Gross profit 20,269 19,045
Administrative expenses (11,231) (9,705)
-------------------------------------------------- ----- -------- --------
Operating profit 9,038 9,340
Profit on disposal of corporate offices 149 -
Finance costs (283) (211)
Finance income 214 167
-------------------------------------------------- ----- -------- --------
Profit before taxation 9,118 9,296
Taxation (1,711) (1,912)
-------------------------------------------------- ----- -------- --------
Profit and total comprehensive income for the
financial year 7,407 7,384
-------------------------------------------------- ----- -------- --------
Profit for the year attributable to the equity
holders of the parent company 7,407 7,384
-------------------------------------------------- ----- -------- --------
Earnings per share attributable to equity holders
of the parent company
Basic 6 19.9p 20.4p
Diluted 6 19.6p 20.3p
-------------------------------------------------- ----- -------- --------
The accompanying notes form an integral part of these condensed
consolidated financial statements.
Statements of financial position
As at 31 December 2022
Group
------------------
2022 2021
Notes GBP'000 GBP'000
-------------------------------------- ------ -------- --------
Assets
Non-current assets
-------------------------------------- ------ -------- --------
Intangible assets 37,308 34,761
Property, plant and equipment 540 501
Right-of-use assets 539 699
Trade and other receivables 1,741 1,788
---------------------------------------------- -------- --------
40,128 37,749
Current assets
-------------------------------------- ------ -------- --------
Trade and other receivables 6,759 5,605
Cash and cash equivalents 3,217 7,413
---------------------------------------------- -------- --------
9,976 13,018
--------------------------------------------- -------- --------
Total assets 50,104 50,767
---------------------------------------------- -------- --------
Liabilities
Non-current liabilities
-------------------------------------- ------ -------- --------
Lease liabilities 378 522
Interest-bearing loans and borrowings - 7,867
Deferred tax liability 2,545 2,872
---------------------------------------------- -------- --------
2,923 11,261
Current liabilities
-------------------------------------- ------ -------- --------
Trade and other payables 5,755 4,526
Lease liabilities 177 191
Interest-bearing loans and borrowings 2,039 861
Corporation tax liability 1,073 281
---------------------------------------------- -------- --------
9,044 5,859
--------------------------------------------- -------- --------
Total liabilities 11,967 17,120
---------------------------------------------- -------- --------
Total net assets 38,137 33,647
---------------------------------------------- -------- --------
Equity
Shareholders' equity
-------------------------------------- ------ -------- --------
Share capital 373 373
Share premium 13,159 13,159
Share-based payments reserve 491 238
Revaluation reserve 162 162
Merger reserve (5,774) (5,774)
Retained earnings 29,726 25,489
---------------------------------------------- -------- --------
Total equity 38,137 33,647
---------------------------------------------- -------- --------
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 2022
Group
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
2021 351 12,150 968 162 (5,774) 20,440 28,297
Changes in equity
Issue of equity share
capital 22 1,009 - - - - 1,031
Share-based payments 4 - - 223 - - - 223
Transfer upon exercise
or cancellation of
share options - - (953) - - 953 -
Dividends 5 - - - - - (3,288) (3,288)
------------------------ -------- -------- ----------- ----------- -------- --------- --------
Transactions with
owners 22 1,009 (730) - - (2,335) (2,034)
Profit and total
comprehensive income
for the financial
year - - - - - 7,384 7,384
------------------------ -------- -------- ----------- ----------- -------- --------- --------
Balance at 31 December
2021 373 13,159 238 162 (5,774) 25,489 33,647
Share-based payments 4 - - 253 - - - 253
Dividends 5 - - - - - (3,170) (3,170)
------------------------ -------- -------- ----------- ----------- -------- --------- --------
Transactions with
owners - - 253 - - (3,170) (2,917)
Profit and total
comprehensive income
for the financial
year - - - - - 7,407 7,407
------------------------ -------- -------- ----------- ----------- -------- --------- --------
Balance at 31 December
2022 373 13,159 491 162 (5,774) 29,726 38,137
------------------------ -------- -------- ----------- ----------- -------- --------- --------
The accompanying notes form an integral part of these condensed
consolidated financial statements.
Statements of cash flows
For the financial year ended 31 December 2022
Group
------------------
2022 2021
Notes GBP'000 GBP'000
-------------------------------------------- ----- -------- --------
Operating activities
-------------------------------------------- ----- -------- --------
Cash generated from/(used in) operating
activities 7 10,828 10,338
Tax paid (1,226) (1,782)
-------------------------------------------- ----- -------- --------
Net cash flows generated from/(used in)
operating activities 9,602 8,556
Investing activities
-------------------------------------------- ----- -------- --------
Acquisitions net of cash acquired 8 (4,044) (4,374)
Sale of assets held for sale - 591
Capital expenditure on intangible trademark
licences (10) -
Capital expenditure on property, plant and
equipment (144) (101)
Disposal of corporate offices 691 -
Franchisee loans granted (909) (796)
Loans repaid by franchisees 771 1,015
Finance income received 214 167
Dividends received - -
-------------------------------------------- ----- -------- --------
Net cash flows (used in)/generated from
investing activities (3,431) (3,498)
Financing activities
-------------------------------------------- ----- -------- --------
Proceeds from share issue - 1,031
Loan repayments (6,758) (890)
Equity dividends paid (3,170) (3,288)
Lease payments (218) (221)
Finance costs (221) (211)
-------------------------------------------- ----- -------- --------
Net cash used in financing activities (10,367) (3,579)
-------------------------------------------- ----- -------- --------
Net change in cash and cash equivalents (4,196) 1,479
Cash and cash equivalents at the beginning
of the financial year 7,413 5,934
-------------------------------------------- ----- -------- --------
Cash and cash equivalents at the end of
the financial year 3,217 7,413
-------------------------------------------- ----- -------- --------
The accompanying notes form an integral part of these condensed
consolidated financial statements.
Notes to the condensed consolidated financial statements
For the financial year ended 31 December 2022
1 Approval
This announcement was approved by the Board of Directors on 24
March 2023.
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 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
Whilst the financial information included in this annual
financial results announcement has been prepared in accordance with
the recognition and measurement principles of UK-adopted
International Accounting Standards and with those parts of the
Companies Act 2006 applicable to companies reporting under
International Financial Reporting Standards (IFRS), this
announcement does not contain sufficient information to comply
therewith.
The financial information set out herein does not constitute the
Company's statutory accounts for the years ended 31 December 2022
or 2021 but is derived from those accounts. Statutory accounts for
the year ended 31 December 2021 have been delivered to the
Registrar of Companies and those for the year ended 31 December
2022 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 2022 and
31 December 2021 did not contain statements under s498 (2) or (3)
of the Companies Act 2006.
Going concern
The Group continues to operate from a sound financial platform,
is strongly cash generative and demonstrates excellent resilience
throughout ever-changing market conditions. The base case forecasts
indicate the Group will generate sufficient cash to support its
growth ambitions, both organically and through acquisition of
moderate-sized companies. Should the Board decide to make a
substantial acquisition, then indications from the Group's bankers
suggest they would be supportive of providing a new, larger
facility.
The Board has nonetheless carried out stress-testing of its base
case forecast including a 5% fall in lettings revenue, and 20% fall
in both sales and financial services revenue in the period to 31
December 2024. Under such circumstances, the Board has concluded
that the Group has adequate resources to continue in operational
existence and to meet its financial obligations as they fall due in
the period to 28 March 2024.
The bank balance as at the date of this report is GBP2.9m. The
outstanding bank loan of GBP2.0m as at the year-end was fully
repaid on 1 March 2023 and the Group has put in place an overdraft
facility of GBP1.0m with HSBC to meet any short-term cash
requirements.
In conclusion, the Board are satisfied that it remains
appropriate to prepare these financial statements on a going
concern basis and that no material uncertainties exist.
Standards adopted for the first time
The following standards, interpretations and amendments are
effective for annual period starting on or after 1 January 2022.
Adoption of these standards has not had an impact on the Group's
financial statements.
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments
to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
-- References to Conceptual Framework (Amendments to IFRS 3).
Standards, amendments and interpretations to existing standards
that are not yet effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the Group has decided
not to adopt early.
The following amendments are effective for the period beginning
1 January 2023:
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
-- Definition of Accounting Estimates (Amendments to IAS 8); and
-- Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
The following amendments are effective for the period beginning
1 January 2024:
-- IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback);
-- IAS 1 Presentation of Financial Statements (Amendment -
Classification of Liabilities as Current or Non-current); and
-- IAS 1 Presentation of Financial Statements (Amendment -
Non-current Liabilities with Covenants).
The Group is currently assessing the impact of these new
accounting standards and amendments. The Group does not believe
that the amendments to IAS 1 will have a significant impact on the
classification of its liabilities, as the conversion feature in its
convertible debt instruments is classified as an equity instrument
and therefore, does not affect the classification of its
convertible debt as a non-current liability.
The Group does not expect any other standards issued by the
IASB, but not yet effective, to have a material impact on 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 business. In the year ended 31
December 2022 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 resource
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
------------------ ------------------ ------------------
2022 2021 2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- -------- -------- -------- -------- --------
Management service
fees 8,629 8,227 2,329 2,483 10,958 10,710
Corporate-owned offices 2,572 2,431 973 1,200 3,545 3,631
------------------------ -------- -------- -------- -------- -------- --------
11,201 10,658 3,302 3,683 14,503 14,341
------------------------ -------- -------- -------- -------- -------- --------
Initial franchise
fees and other resale
commissions 461 314
Other income 614 555
------------------------ -------- -------- -------- -------- -------- --------
Property franchise
division 15,578 15,210
Financial services
division 18,140 14,437
------------------------ -------- -------- -------- -------- -------- --------
Total revenue 33,718 29,647
------------------------ -------- -------- -------- -------- -------- --------
Gross profit for the two divisions is split as follows:
Gross profit
------------------
2022 2021
GBP'000 GBP'000
---------------------------- -------- --------
Property franchise division 15,578 15,210
Financial services division 4,691 3,835
---------------------------- -------- --------
Total gross profit 20,269 19,045
---------------------------- -------- --------
Profit for the financial year
The parent company has taken advantage of Section 408 of the
Companies Act 2006 and has not included its own statement of
comprehensive income in these financial statements. The profit on
ordinary activities after taxation of the Company for the year was
GBP5,594,000 (2021: GBP7,418,000).
4 Share-based payments
Administrative expenses include a charge of GBP253,000 (2021:
GBP223,000) 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
2022 2021
GBP'000 GBP'000
-------------------------------------------------------- -------- --------
Final dividend for 2021
4.5p per share paid 30 May 2022 (2021: 5.1p per share
paid 16 June 2021 included 1.3p catch-up on final 2019
dividend) 1,678 1,796
Interim dividend for 2022
4.0p per share paid 28 October 2022 (2021: 4.0p per
share paid 29 October 2021) 1,492 1,492
-------------------------------------------------------- -------- --------
Total dividend paid 3,170 3,288
-------------------------------------------------------- -------- --------
The Directors propose a final dividend of 5.0p per share
totalling GBP1,865,000 for 2022, payable 22 May 2023, to
shareholders on the register on 11 April 2023. As this remains
conditional on shareholders' approval, provision has not been made
in these financial statements.
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. Options over ordinary shares and rights of
conversion are described in note [25]. The calculation of diluted
earnings per share is derived from earnings per share, adjusted to
allow for the issue of shares under these instruments.
2022 2021
GBP'000 GBP'000
------------------------------ -------- --------
Profit for the financial year 7,407 7,384
------------------------------ -------- --------
Weighted average number of ordinary shares Number Number
------------------------------------------- ------ ------
Basic 37,292 36,142
Diluted 37,803 36,434
------------------------------------------- ------ ------
Earnings per share Pence Pence
------------------- ----- -----
Basic 19.9p 20.4p
Diluted 19.6p 20.3p
------------------- ----- -----
7 Reconciliation of profit before taxation to cash generated
from operations
Group
2022 2021
GBP'000 GBP'000
---------------------------------------- -------- --------
Profit before taxation 9,118 9,296
Depreciation and amortisation charges 930 967
Impairment of intangibles and goodwill 121 -
Profit on disposal of corporate office (149) -
Share-based payment charge 253 223
Impairment of franchisee loan book - 85
Amortisation of debt costs 29 29
Finance costs 262 191
Interest paid on lease liabilities 21 20
Finance income (214) (167)
---------------------------------------- -------- --------
10,371 10,644
Increase in trade and other receivables (955) (186)
Increase in trade and other payables 1,228 -
Trade and other receivables acquired 1,391 -
Trade and other payables acquired (1,207) (120)
---------------------------------------- -------- --------
Cash generated from operations 10,828 10,338
---------------------------------------- -------- --------
8 Acquisitions
Belvoir Group PLC acquired Mr and Mrs Clarke Ltd ("MMC"), a
network of personal estate agents operating through ten partners
and associates, on 11 March 2022 for cash consideration of
GBP47,000. The acquisition provides a platform from which to build
the Group's personal agency model.
Brook Financial Services Ltd acquired The TIME Group Ltd
("TIME"), a network of 63 mortgage advisers, on 23 May 2022 for
cash consideration of GBP4,488,000.
For both acquisitions, the goodwill represents the value
attributable to the new businesses and the assembled and trained
workforce.
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.
On the conversion of an independent estate agency in Worksop to
a Newton Fallowell franchise office on 14 November 2022, Newton
Fallowell acquired the goodwill for GBP42,000.
Mr and The TIME
NF Worksop Mrs Clarke Group Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ---------- ----------- -------- --------
Intangible assets - master franchise
agreement - 69 - 69
Intangible assets - trade names - 13 - 13
Intangible assets - website - 48 - 48
Tangible assets - - 2 2
Trade and receivables - 62 1,329 1,391
Cash - - 403 403
Trade and other payables - (244) (963) (1,207)
Deferred tax liabilities - (21) - (21)
------------------------------------- ---------- ----------- -------- --------
Identifiable net assets acquired - (73) 771 698
------------------------------------- ---------- ----------- -------- --------
Goodwill on acquisition 42 120 3,717 3,879
------------------------------------- ---------- ----------- -------- --------
Consideration 42 47 4,488 4,577
------------------------------------- ---------- ----------- -------- --------
Consideration settled in cash 42 47 4,358 4,447
------------------------------------- ---------- ----------- -------- --------
Deferred consideration - - 130 130
------------------------------------- ---------- ----------- -------- --------
Consideration settled in cash 42 47 4,488 4,577
------------------------------------- ---------- ----------- -------- --------
Post-acquisition financial results
Mr and The TIME
Mrs Clarke Group Total
GBP'000 GBP'000 GBP'000
---------------- ----------- -------- --------
Revenue 128 2,727 2,855
Profit and loss (195) 359 164
---------------- ----------- -------- --------
If the acquisitions had completed on the first day of the
financial year, Group revenues would have been GBP35.7m and Group
profit before tax would have been GBP9.3m.
9 Post balance sheet event
On 1 March 2023 the Nicholas Humphreys Derby office was
franchised to the branch manager for GBP513,000.
10 Posting of accounts
It is intended that the financial statements for the year ended
31 December 2022 and the notice of the 2023 AGM will posted to
shareholders and made available on the company's website
www.belvoirgroup.com on 11 April 2023 and will also be available
thereafter at the registered office, The Old Courthouse, 60a London
Road, Grantham, NG31 6HR.
11 Annual General Meeting
The Annual General Meeting will be held at 10am on 18 May 2023
at the registered office, The Old Courthouse, 60a London Road,
Grantham, NG31 6HR.
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