HY Trading Update - Ahead of Expectations
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3 August 2021 |
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BELVOIR!
BELVOIR GROUP PLC
(the "Group", or "Belvoir")
Pre-Close Trading Update
Ahead of Expectations
Belvoir Group PLC (AIM:BLV), a leading UK property franchise and financial services Group, provides the following update ahead of publishing its Half Year results on 6 September 2021.
Further to the update on 27 May, the Board is pleased to report that trading has continued to be exceptionally strong with Group revenue during the six months to 30 June 2021 up 41% on 2020, which had been impacted by the Covid-19 pandemic, and up 53% on 2019 (42% on a like-for-like basis), with substantial revenue growth across both divisions on the back of a very buoyant housing market. In comparison to H1 2019, the property division achieved revenue growth of 45%, of which 25% represented growth in the underlying business and 20% from the Group's investment in two additional franchise networks, Lovelle in January 2020 and Nicholas Humphreys on 31 March 2021. Meanwhile, the financial services division reported revenue up 62% on H1 2019 through organic growth of the adviser network.
Management Service Fees ("MSF"), the core franchise revenue stream, from residential sales was up 100% on H1 2020 reflecting the lower transaction level in Q2 2020 due to the first national lockdown by contrast to the exceptional level of house sales in H1 2021 driven by the stamp duty holiday and the "race for space". By comparison to H1 2019 on a like-for-like basis, sales MSF was up 68%. The shortage of available property to meet current levels of demand has resulted in the UK house price index reaching 10.0% for the year to May 2021, compared with 2.2% at the end of 2019 prior to the start of the Covid-19 pandemic. Current pipelines and the ongoing demand for property suggests that the transitional approach to ending the stamp duty holiday, which finally ends on 30 September this year, has succeeded in avoiding the cliff edge feared at the start of 2021 with instead a gradual return to a more normal transaction level anticipated in Q4.
Meanwhile, MSF from lettings, which had been much less impacted by the first national lockdown and operated on par with H1 2019, was up 13% on H1 2020. Of this, 3% was attributable to the acquisition of the Nicholas Humphreys network on 31 March 2021 and the franchising of certain previously corporate-owned Lovelle offices. The underlying growth of 10% compares favourably with the overall UK rental index to June 2021 of 1.2% which rose to 1.8% excluding London, and to 2.4% in the East and West Midlands, where the Belvoir Group is particularly strong. There are signs of more substantial rental increases on the horizon with the rental growth from new tenancies reportedly running at 5.9% UK-wide, and 8.0%, excluding London.
Revenue growth from the financial services division, up 51% on H1 2020, clearly benefitted from the demand for mortgages to fund house purchases, but also from a 21% increase in the Belvoir adviser network, which was up to 221 (H1 2020: 176) advisers at the end of June 2021. The subsequent acquisition of Nottingham Mortgage Services Limited, the mortgage arm of the Nottingham Building Society ("The Nottingham"), completed on 30 July, has taken Belvoir's number of advisers up to 242. The strengthening of the strategic partnership with The Nottingham will extend the financial services division in the first instance from servicing The Nottingham's existing members and branch customers, and longer term from servicing their fast-growing base of over 50,000 Lifetime ISA online account holders through the Beehive Money app, many of whom are saving to buy their first home. Helping these future first-time buyers to access the right mortgage to meet their home-ownership aspirations has the prospect of generating significant mortgage opportunities in the coming years.
The Group continues to achieve a high rate of cash conversion and maintains a strong balance sheet with cash balances of £5.1m (H1 2020: £4.3m) and bank loans of £9.1m (H1 2020: 10.0m) at the end of June 2021. Net debt of £4.0m (H1 2020: £5.7m), up £0.3m since the end of 2020, is after having acquired Nicholas Humphreys for £4.0m in cash.
Given the Group's growth in H1 over both 2019 and 2020, its earnings enhancing investments to expand both the property and the financial services divisions, and the current market conditions reflecting a sustained underlying demand for homes and mortgages, the Board is confident of achieving a strong trading performance for the full financial year.
Dorian Gonsalves, CEO of Belvoir Group, commented:
"We continue to see exceptionally strong trading across the Group, well ahead of our expectations as at the start of the year. Our residential property sales hit a peak in June and pipelines remain strong. Lettings has achieved growth from increased rental activity and tenant demand creating an upward pressure on rents.
"Our financial services division continues to go from strength to strength, benefitting from the strong sales market and our enlarged network of advisers.
"The Board has continued to pursue its growth strategy in H1 through the acquisition of Nicholas Humphreys, increasing the footprint of our property franchise division, along with the strengthening of our long-term strategic partnership with The Nottingham Building Society through the acquisition of its mortgage business, Nottingham Mortgage Services Limited. Both acquisitions will be highly accretive in 2021 and demonstrate the Board's commitment to enhancing shareholder value further."
Notice of Half Year Results
Belvoir will announce its Half Year results for the six months to 30 June 2021 on Monday, 6 September 2021.
An analyst briefing will be held via zoom at 9.00am on the morning of results, hosted by Dorian Gonsalves, Chief Executive Officer, and Louise George, Chief Financial Officer. To register your attendance please contact Buchanan on 0207 466 5000 or via belvoir@buchanan.uk.com .
Management will be hosting a separate meeting for retail investors via the Investor Meet Company platform on 6 September 2021 at 4:30pm. The presentation is open to all existing and potential shareholders. Investors can register via the following link: https://www.investormeetcompany.com/belvoir-group-plc/register-investor
For further details:
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Belvoir Group PLC Dorian Gonsalves, Chief Executive Officer Louise George, Chief Financial Officer
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01476 584900 investorrelations@belvoirgroup.com |
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finnCap Julian Blunt, Teddy Whiley (Corporate Finance) Tim Redfern (ECM)
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+44 (0) 20 7220 0500 |
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Buchanan Charles Ryland, Victoria Hayns & Tilly Abraham
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+44 (0) 20 7466 5000 |
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Notes:
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 71,500 properties and reported record revenues of £21.7m in 2020 marking Belvoir's 24th year of unbroken profit growth.
For further information, please visit: www.belvoirgroup.com
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