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Belvoir Group PLC (BLV)

  Print          Annual reports

Monday 06 September, 2021

Belvoir Group PLC

Interim Results for the 6 months ended 30 June 21

RNS Number : 7577K
Belvoir Group PLC
06 September 2021
 

6 September 2021

BELVOIR!
 


BELVOIR GROUP PLC

(the "Company", "Group" or "Belvoir")

 

Interim Results for the six months ended 30 June 2021

 

Strong growth continues

 

Belvoir Group PLC (AIM: BLV), a leading UK property franchise and financial services Group, is pleased to announce its Interim Results for the six months ended 30 June 2021.

 

Financial Highlights

· H1 results are significantly ahead of management's expectations as at the start of the year

· 41% increase in revenue to £13.8m (H1 2020: £9.8m), of which 33% related to the underlying business and 8% to the acquired Nicholas Humphreys network

· 26% increase in Management Service Fees (MSF) to £5.2m (H1 2020: £4.2m)

· 51% increase in Financial Services revenue to £6.4m (H1 2020: £4.3m)

· Gross profit split of 56% lettings: 21% sales: 18% financial services: 5% other (H1 2020: 62%, 15%, 18%, 5%) reflects the stronger sales market in H1 2021 compared to H1 2020

· 51% increase in profit before tax to £4.8m (H1 2020: £3.2m) of which 42% arose from the underlying business and 9% from the acquired Nicholas Humphreys network

· 36% increase in basic earnings per share to 9.9p (2020: 7.3p), having reflected the impact of the 2023 corporation tax increase on deferred tax

· Highly cash generative with 119% (H1 2020: 113%) of operating profit converting into operating cash flow enabling strategic acquisitions to be funded from cash reserves  

· Increased interim dividend of 4.0p per share (H1 2020: 3.4p)

 

Operational Highlights

· Acquisition of the 20-office Nicholas Humphreys lettings and estate agency network for £4.4m on 31 March 2021, funded from existing cash reserves

· Net increase of 47 financial services advisers bringing the total to 221 (H1 2020: 174) at the period end

· Strengthened our strategic alliance with The Nottingham Building Society through the £0.7m acquisition of its financial services arm, Nottingham Mortgage Services Limited, which completed on 30 July 2021 and added a further 21 advisers

 

 

Dorian Gonsalves, Chief Executive Officer of Belvoir Group, commenting on the results, said:

 

"I am delighted to report another half year of both strategic and trading growth, having bought and integrated the Nicholas Humphreys network and increased revenue and profitability from the underlying business.  The Group achieved substantial revenue growth across the three markets in which it operates with lettings up 21%, property sales up 78% and financial services up 51%.

 

"Having demonstrated the resilience of the Group's business model throughout 2020, in H1 2021 the Group capitalised on the opportunities arising from the buoyant housing market, and demonstrated that the success of Belvoir's growth strategy has been unaffected by the pandemic.

 

"Further strategic progress has been achieved early in H2 as our alliance with The Nottingham Building Society was strengthened further through the acquisition of The Nottingham's mortgage arm, Nottingham Mortgage Services Limited.  Adding 21 advisers to our network to give a total of 242, we will be servicing The Nottingham's existing members and customers from within The Nottingham's branches.  Additionally, our central adviser team will be helping many first-time buyers (currently saving through The Nottingham's Lifetime ISA online account) to access the right mortgage to meet their home-ownership aspirations.  We believe that our relationship with The Nottingham has the prospect of generating significant opportunities in the coming years.

 

" Having reported H1 profitability considerably ahead of our start of year expectations, and given the Group's further investment in earnings enhancing businesses to expand both the property and the financial services divisions, and high activity levels within all areas of our business at the start of H2, the Board is confident of achieving a strong trading performance for the full year."

 

Retail investor presentation

Dorian Gonsalves, CEO, and Louise George, CFO, will present live to retail investors reporting on the Group's interim 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

 

 

For further details:

Belvoir Group PLC

Dorian Gonsalves, Chief Executive Officer

Louise George, Chief Financial Officer

www.belvoirgroup.com

 

 01476 584900

[email protected]

 

finnCap

Julian Blunt & Teddy Whiley (Corporate Finance)

Tim Redfern (ECM)

www.finncap.com

 

+44 (0) 20 7220 0500

Buchanan

Charles Ryland, Vicky Hayns & Tilly Abraham

 

 +44 (0) 20 7466 5000

     

Notes:

About Belvoir Group PLC

Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a nationwide property franchise Group with 467 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 71,600 properties and reported record revenues of £21.7m in 2020 marking Belvoir's 24th year of unbroken profit growth.

 

 

Chief Executive's Report

It gives me great pleasure to report on the Group's Interim Results for the six months ended 30 June 2021.

 

Performance

2021 is proving to be an exceptional year for the property and the mortgage markets with the Belvoir Group having been well-positioned to take advantage of these positive trading conditions.  H1 revenue was up 41% to £13,810,000 (H1 2020: £9,774,000) and profit before tax was up 51% to £4,767,000 (H1 2020: £3,164,000) building on the 8% revenue growth and 18% profit growth reported in H1 2020 against H1 2019. 

 

The Group achieved substantial revenue growth across the three markets in which it operates with lettings up 21%, property sales up 78% and financial services up 51%.

 

Property division

Revenue from the property division increased by 34% to £7,389,000 (H1 2020: £5,521,000) of which 19% was attributable to organic growth. The Group has continued to invest in its franchise property network through the strategic acquisition of Nicholas Humphreys, a national brand specialising in student lettings through 17 franchised and three owned offices in mainly University towns.  The acquisition completed in March for £4,400,000 (£4,146,000 net of cash acquired) and accounted for 15% of H1 2021 property revenue growth.

 

The ratio of lettings to sales, which has been around 80:20 for several years, moved to 73:27 in H1 2021 reflecting the exceptionally high level of property sales transactions during the first half of 2021.

 

The Group continues to attract new franchise owners to its property network, a testament to the strength of the Group and its franchise business model, with six new franchise owners joining in the year to date, all of whom acquired an existing franchise office.  Meanwhile, two existing franchise owners opened a second office within their territory.  The property division now totals 366 offices including 39 dual-branded Nottingham Building Society branches, and has a portfolio of 71,600 (H1 2020: 69,000) managed properties.

 

The property sector has seen high levels of demand with the "race-for-space" driving both the rental and sales markets, and the latter fuelled further by the stamp duty holiday.  The shortage of available property both to buy and to rent has resulted in annual UK house price inflation to June 2021 of 13.2% and rental growth on new tenancies reportedly up to 5.9% UK-wide, and 8.0% excluding London. 

 

Financial services division

Revenue from the financial servicesdivision increased by 51% to £6,421,000 (H1 2020: £4,253,000), clearly benefitting from the high demand for mortgages to fund house purchases, but also from extending the adviser network by 27% to 221 (H1 2020: 174).  The mix of mortgage products sold has changed with the ratio of purchase to remortages at 72:28 (H1 2020: 58:42).  These changes reflect the resilience of our financial adviser network, as evidenced by its positive response to the very different prevailing market conditions during both periods under review.  Our financial services division benefits from having a substantial client base, so during the first national lockdown in H1 2020, advisers turned their attention to advising existing clients on remortgages and life protection products.  By contrast in H1 2021, the focus was on meeting the demand for new purchase mortgages.

 

The Group's financial services division continues to achieve substantial growth through independent channels as well as through strengthening relationships within the Group's property franchise network.  Building on this success, the Belvoir Group sees financial services as a key strategic long-term growth opportunity.   

 

The post-period end acquisition of Nottingham Mortgage Services Limited, the mortgage arm of the Nottingham Building Society ("The Nottingham"), completed on 30 July 2021 at a cost of £700,000 (£600,000 net of cash acquired).  This increased Belvoir's number of advisers by 21 to 242.  The strengthening of the strategic alliance with The Nottingham will extend the financial services division in the first instance from servicing The Nottingham's existing members and customers from within their local building society branch, and longer term from our central adviser team servicing their fast-growing base of over 50,000 Lifetime ISA ('LISA') online account holders, many of whom are saving to buy their first home.  Furthermore, the launch of The Nottingham's Beehive Money app, scheduled for the Autumn 2021, is expected to accelerate growth in their number of LISA savers.  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.

 

Outlook

Current pipelines of house sales and the ongoing demand for property suggests that the transitional approach to ending the stamp duty holiday, which ends on 30 September this year, has succeeded in avoiding the cliff edge feared at the start of 2021.  Instead, a gradual return to a more normal transaction level is anticipated in Q4.

 

The lettings market remains active with strong demand from tenants, as with homeowners, for more space.  Meanwhile, the stamp duty holiday has provided a catalyst for landlord purchase activity over the past year, coupled, in recent months, with an influx of buy-to-let mortgage offers coming onto the market reducing the average rate for buy-to-let mortgages.

 

The mortgage market still has a strong pipeline of written business and is expected to follow a similar trend to the sales market as it transitions towards a more normal level of house purchase transactions.  Recent reductions in mortgage rates for two, three and five year fixed mortgages are expected to stimulate the remortgage market, whilst the increase in mortgage deals at a higher loan-to-value are likely to boost demand from borrowers with smaller deposits. 

 

To the extent that 2020 demonstrated the resilience of the Group's business model, 2021 has demonstrated the success of Belvoir's growth strategy that has been largely unaffected by the pandemic.  The Group has continued to achieve growth in the underlying business whilst extending the reach of both divisions through acquisition.  The highly cash generative nature of the Group has enabled these acquisitions to be funded from cash reserves, and as such, has avoided dilution for shareholders whilst adding highly accretive businesses to the Group.  The Board remains committed to further investment in businesses that fit within its multi-brand franchise business model and are complimentary to existing property-related services.

 

Having reported H1 profitability considerably ahead of our start of year expectations, and given the Group's further investment in earnings enhancing businesses to expand both the property and the financial services divisions, and high activity levels across all areas of our business at the start of H2, the Board is confident of achieving a strong trading performance for the full year.  Due to this ongoing confidence, the Board has declared an increased interim dividend for shareholders.

 

Dorian Gonsalves

Chief Executive Officer

 

 

 

 

Financial Review

Revenue

Group revenue in the first six months of 2021 was up 41% to £13,810,000 (H1 2020: £9,774,000), an increment of £4,036,000 of which £808,000 reflects the March 2021 acquisition of the Nicholas Humphreys network, and the remaining £3,228,000 represents growth of 33% in the underlying business.

 

Within our property franchise division, Management Service Fees, our key underlying income stream from franchisees, increased by 26% to £5,243,000 (H1 2020: £4,157,000) with lettings up 13% to £4,015,000 (H1 2020: £3,544,000) and sales up 100% to £1,228,000 (H1 2020: £613,000).  H1 MSF growth benefitted from £48,000 of additional MSF arising from the franchising out of five Lovelle corporate-owned offices between August 2020 and January 2021 and £81,000 from the Nicholas Humphreys franchise network.  Having adjusted for these two elements, MSF from the underlying business increased by 23%.

 

Revenue from our corporate-owned offices increased by £593,000 to £1,655,000 (H1 2020: £1,062,000).  The Nicholas Humphreys acquisition included three corporate-owned offices which added £724,000 to H1 2021 revenue.  By comparison, H1 2020 corporate income included £493,000 relating to the temporary ownership of five Lovelle offices that have since been franchised.  On a like-for-like basis, revenue from the two long-standing corporate-owned offices, Belvoir Grantham and Newton Fallowell Grantham, increased by 64%.

 

In the year to date, five existing franchise owners completed on an assisted acquisition with a total deal value of £1,308,000 (H1 2020: £1,147,000) of which £143,000 (H1 2020: £132,000) was funded by a Central Office loan.  Based on their historic results, these acquisitions brought in 790 additional managed properties and should add £1,144,000 p.a. (H1 2020: £1,474,000 p.a.) to our franchisee network revenue.  This would increase Group revenue through annualised recurring MSF by £123,000 with a contribution of around £69,000 to MSF expected in 2021. 

 

Franchise fees and other income, including insurance, conveyancing and other commissions, and fees for other services to franchisees, contributed £491,000 (H1 2020: £302,000).  Six new franchise owners have joined the Group, all taking on an existing franchise office under our resales programme.

 

Financial services revenue in H1 was up 51% to £6,421,000 (H1 2020: £4,253,000) as a result of a strong house sales market and the increase in our adviser network, up 47 advisers to 221 (H1 2020: 174).  The number of written mortgages was up 67% to 8,351 (H1 2020: 5,007) with the growth coming from purchase mortgages rather than remortgages as evidenced by the higher ratio of house purchase to remortgages of 72:28 (H1 2020: 58:42). 

 

Gross profit

Gross profit increased by 33% to £8,947,000 (H1 2020: £6,720,000) of which 21% arose from organic growth in the underlying business and 12% from the acquired Nicholas Humphreys network.  The gross profit split of 56% lettings: 21% sales: 18% financial services: 5% other (H1 2020: 62%, 15%, 18%, 5%) reflects a shift towards sales resulting from the strong sales market in H1 2021 compared to H1 2020 when sales were more adversely affected by the first national lockdown than either lettings or financial services.

 

The gross profit margin from financial services of 24.3% in H1 2021 was lower than 28.2% in H1 2020, resulting in H1 2021 Group gross margin of 64.8% (H1 2020: 68.8%).  H1 2021 Group operating margin was up at 34.6% (H1 2020: 32.9%).  These shifts reflect the greater proportion of independent Business Partners operating within the financial services network, some of whom join together in 'hubs', and who earn a higher rate.  This operating model does not require a comparable increase in overheads, and as such has contributed to the improvement in the operating profit margin.

 

Administrative expenses

Administrative expenses increased by £416,000 to £4,167,000 (H1 2020: £3,751,000).  The incremental overheads of £444,000 and one-off professional costs of £129,000 arising from the Nicholas Humphreys acquisition were offset by an overhead reduction of £354,000 from having franchised out the five Lovelle corporate offices.  A further £135,000 arose on the additional employers NIC payable against managements share options due to 58% increase in the share price during H1 2021.

 

Profit before taxation

Profit before taxation for the period was up 51% to £4,767,000 (H1 2020: £3,164,000). 

 

Taxation

The effective rate of corporation tax for the period was 27% (H1 2020: 19%).  The March 2021 Budget commitment to increase corporation tax to 25% with effect from April 2023 was substantially enacted in May 2021.  As a result, deferred tax balances expected to reverse after April 2023 have been remeasured at 25%.  This gave rise to additional corporation tax charge of £345,000 being recognised in H1 2021.

 

Profit after taxation

Profit after taxation for the period was up 36% to £3,486,000 (H1 2020: £2,563,000), which built further on the 18% growth reported at H1 2020.

 

Earnings per share

Basic earnings per share was up 36% to 9.9p (H1 2020: 7.3p) based on an average number of shares in issue in the period of 35,326,000 (H1 2020: 35,087,000).  Similarly, the diluted basic earnings per share was up 35% to 9.3p (H1 2020: 6.9p) based on an average number of shares in issue in the period of 37,285,000 (H1 2020: 37,072,000). See note 5 to the interim statements for detailed EPS calculations.


Dividend

Given the strong financial performance of the Group in H1, the Board is pleased to announce an increased interim dividend of 4.0p (H1 2020: 3.4p) payable to shareholders on 29 October 2021 based upon the register on 17 September 2021.  The ex-dividend date will be 16 September 2021. 


Cash flow

On an operational level, the Group was highly cash generative with 119% (H1 2020: 113%) of operating profit converting into operating cash flow of £5,671,000 (H1 2020: £3,639,000).  The net cash inflow from operating activities after taxation of £4,843,000 (H1 2020: £3,056,000) reflects increased operational activity and the enlarged Group.

 

On 16 January 2021, the last remaining corporate-owned Lovelle office was franchised out for consideration of £591,000, to the branch manager, who was wholly funded under the assisted acquisition programme.

 

On 31 March 2021 the Group completed on the acquisition of White Kite Limited, the trading company that operates the Nicholas Humphreys estate and lettings agency network, for £4,146,000 net of cash acquired.  This comprised three corporate-owned offices and 17 franchised offices.  

 

The Group had taken advantage of the Covid-19 government VAT deferral scheme in H1 2020 which permitted the deferral of VAT payable of £473,000 in May 2020.  This was subsequently paid in December 2020.

 

Liquidity and capital resources

The Group had cash balances of £5,183,000 (H1 2020: £4,305,000) and a term loan of £9,158,000 (H1 2020: £10,022,000) leaving net debt of £3,975,000 (H1 2020: £5,717,000).  The term loan is repayable in half yearly payments of 445,000 with a final repayment of £7,868,000 in March 2023 and bears interest at 1.95% over the LIBOR rate.

 

Financial position

The Group continues to operate from a sound financial platform, generating sufficient cash from the operations of the enlarged Group to meet the interest and capital payable on the loan facility and dividends to shareholders.  At the end of June 2021, the Group was comfortably inside all of its bank covenants with the debt service cover at 6.6x times (H1 2020: 2.9x).  This increase in cover reflects that both the acquisition of Lovelle in 2020 and that of Nicholas Humphreys in 2021 have added to the Groups operational cash inflow whilst having been funded from existing cash reserves, rather than debt.  The Group maintains a franchisee loan book, currently at £3,423,000 (H1 2020: £2,974,000), which provides financial assistance to franchisees under the assisted acquisitions programme to accelerate their growth and therein contribute towards increased Group revenue. 

 

The Group's operational and diversified business model underpinned by a strong recurring lettings revenue stream has helped to deliver consistent profit growth.  The Group's capital allocation policy provides a reliable dividend with an attractive yield for investors, whilst retaining funding for the Group's growth strategy.

 

Louise George

Chief Financial Officer
 

Condensed Group Statement of Comprehensive Income

For the six months ended 30 June 2021

 

Notes

Unaudited
Six months
ended
30 June
2021

Unaudited
Six months
ended
30 June
2020

 

Audited
Year
ended
31 December
20201

 

 

£'000

£'000

£'000

 

 

 

 

 

Revenue

2

13,810

9,774

21,692

Cost of sales

 

(4,863)

(3,054)

(6,896)

Gross profit

 

8,947

6,720

14,796

 

 

 

 

 

Other operating income - government grants

 

-

250

-

Administrative expenses

 

(4,167)

(3,751)

(8,169)

Operating profit

 

4,780

3,219

6,627

 

 

 

 

 

Finance costs

 

(103)

(149)

(261)

Finance income

 

90

94

181

Other income

 

-

-

123

Profit before taxation

 

4,767

3,164

6,670

Taxation

4

(1,281)

(601)

(1,353)

Profit and total comprehensive income for the financial period

 

3,486

2,563

5,317

 

 

 

 

 

Profit for the period attributable to the equity holders of the parent company

3,486

2,563

5,317

 

 

 

 

 

Basic earnings per share from continuing operations

5

9.9p

7.3p

15.1p

Diluted basic earnings per share from continuing operations

5

9.3p

6.9p

14.6p

 

 

 

 

 

 

         

 

1 The split between ongoing operations and operations from assets held for resale is detailed within the 2020 annual report and accounts.
 

Consolidated Statement of Financial Position

As at 30 June 2021

 

 

 

 

Unaudited

At
30 June
2021

Unaudited

At
30 June
2020

Audited

At
31 December
2020

 

 

 

 

£'000

£'000

 

£'000

Assets

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Intangible assets

 

 

 

33,837

31,053

29,942

Financial assets

 

 

 

-

159

-

Property, plant and equipment

 

 

 

513

545

511

Right-of-use assets

 

 

 

389

544

455

Trade and other receivables

 

 

 

2,178

2,236

 

 

 

 

36,917

34,537

32,878

Current  assets

 

 

 

 

 

 

Trade and other receivables

 

 

 

5,692

4,316

5,063

Assets held for sale

 

 

 

-

-

591

Cash and cash equivalents

 

 

 

5,183

4,305

 

 

 

 

10,875

8,621

11,588

Total  assets

 

 

 

47,792

43,158

44,466

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Interest bearing loans and borrowings

 

 

 

8,297

9,161

8,728

Lease liabilities

 

 

 

242

356

289

Deferred tax

 

 

 

1,951

1,693

 

 

 

 

10,490

11,210

10,463

Currentliabilities

 

 

 

 

 

 

Trade and other payables

 

 

 

4,620

3,081

3,849

Interest bearing loans and borrowings

 

 

 

861

861

861

Lease liabilities

 

 

 

157

195

175

Tax payable 

 

 

 

1,063

747

 

 

 

 

6,701

4,884

5,706

Totalliabilities

 

 

 

17,191

16,094

16,169

Total net assets

 

 

 

30,601

27,064

28,297

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Share capital

 

 

 

362

351

351

Share premium

 

 

 

12,647

12,127

12,150

Share based payment reserve

 

 

 

1,075

615

968

Other components of equity

 

 

 

162

162

162

Merger reserve

 

 

 

(5,774)

(5,774)

(5,774)

Retained earnings

 

 

 

22,129

19,583

Total equity

 

 

 

30,601

27,064

28,297

 

Consolidated Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2021

 

 

Share capital

Share
premium

Share based payment reserve

Merger
reserve

Other components of equity

Retained
earnings

Total
equity

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2020 (Audited)

 

349

12,006

524

(5,774)

162

17,020

24,287

Share based payments

 

-

-

91

-

-

-

91

Issue of equity share capital

 

2

121

-

-

-

-

123

Transactions with owners

 

2

121

91

-

-

-

214

Profit and total comprehensive income for the six month period

 

-

-

-

-

-

2,563

2,563

Balance at 30 June 2020 (Unaudited and restated)

 

351

12,127

615

(5,774)

162

19,583

27,064

Share based payments

 

-

-

353

-

-

-

353

Issue of equity share capital

 

-

23

-

-

-

-

23

Dividends

 

-

-

-

-

-

(1,897)

(1,897)

Transactions with owners

 

-

23

353

-

-

(1,897)

(1,521)

Profit and total comprehensive income for the six month period

 

-

-

-

-

-

2,754

2,754

Balance at 31 December 2020 (Audited)

351

12,150

968

(5,774)

162

20,440

28,297

Share based payments

 

-

-

107

-

-

-

107

Issue of equity share capital

 

11

497

-

-

-

-

508

Dividends

 

-

-

-

-

-

(1,797)

(1,797)

Transactions with owners

 

11

497

107

-

-

(1,797)

(1,182)

Profit and total comprehensive income for the six month period

 

-

-

-

-

-

3,486

3,486

Balance at 30 June 2021 (Unaudited)

 

362

12,647

1,075

(5,774)

162

22,129

30,601

 


 

 

Consolidated Statement of Cash Flows
For the six months ended 30 June 2021

 

 

Notes

Unaudited

30 June
2021

Unaudited

30 June
2020

Audited

31 December
2020

 

 

 

£'000

£'000

£'000

Operating activities

 

 

 

 

 

Cash generated from operating activities

 

6

5,671

3,639

8,198

Tax paid

 

 

(828)

(583)

(1,379)

Net cash flows generated from operating activities

 

 

4,843

3,056

6,819

Investing activities

 

 

 

 

 

Capital expenditure on property, plant and equipment

 

 

(26)

(23)

(46)

Sale of assets held for sale

 

 

591

-

176

Acquisitions net of cash acquired

 

 

(4,146)

(1,982)

(2,039)

Settlement of contingent consideration

 

 

-

(37)

(37)

Corporate office disposals

 

 

-

-

25

Franchisee loans granted

 

 

(684)

(257)

(653)

Loans repaid by franchisees

 

 

503

435

758

Finance income

 

 

90

94

181

Sale of MAB shares

 

 

-

-

271

Net cash (used in)/from investing activities

 

 

(3,672)

(1,770)

(1,364)

Financing activities

 

 

 

 

 

Finance costs

 

 

(103)

(140)

(261)

Loan repayments

 

 

(445)

(445)

(890)

Lease repayments

 

 

(85)

(105)

(205)

Proceeds from share issue

 

 

508

123

146

Equity dividends paid

 

 

(1,797)

-

(1,897)

Net cash used in financing activities

 

 

(1,922)

(567)

(3,107)

Net change in cash and cash equivalents

 

 

(751)

719

2,348

Cash and cash equivalents at the beginning of the financial period

 

 

5,934

3,586

3,586

Cash and cash equivalents at the end of the period

 

 

5,183

4,305

5,934

 

 

 

Notes to the Interim Financial Statements

 

1 General information and basis of preparation

The financial information set out in these condensed consolidated interim financial statements for the six months ended 30 June 2021 and the comparative figures are unaudited.

They have been prepared taking into account the requirements of relevant accounting standards and the AIM rules. They do not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and do not contain all the information required for full annual financial statements.

The statutory audited accounts for the year ended 31 December 2020 have been delivered to the Registrar of Companies in England and Wales. The Auditor's report on these accounts was unqualified and did not contain statements under Section 498 of the Companies Act 2006.

The condensed consolidated interim financial statements are presented in sterling, which is also the functional currency of the parent company.

Belvoir Group PLC is the group's ultimate parent company. The Company is a Public Limited Company incorporated and domiciled in the United Kingdom.

The Group's registered office and principal place of business is The Old Courthouse, 60a London Road, Grantham, Lincolnshire, NG31 6HR. Its shares are listed on the AIM market of the London Stock Exchange.

The condensed interim financial statements for Belvoir Group PLC have been approved for issue by the Board of Directors on 3 September 2021.

Significant accounting policies

The condensed consolidated interim financial statements have been prepared under the historical cost convention. Being listed on AIM, the Company is required to present its consolidated financial statements in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and with those parts of the Companies Act 2006 applicable to companies reporting under International Financial Reporting Standards (IFRS).

In preparing these interim financial statements, the Board have considered the impact of new standards which will be applied in the 2021 Annual Report and Accounts and there are not expected to be any changes in the accounting policies compared to those applied at 31 December 2020.

2 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 six months ended 30 June 2021 the Board identified two operating segments, that of franchisor of property agents, comprising income from lettings and property sales, 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 any 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

 

Unaudited

H1
2021

£'000

Unaudited

H1
2020

£'000

Audited

FY
2020

£'000

Unaudited

H1
2021

£'000

Unaudited

H1
2020

£'000

Audited

FY
2020

£'000

Unaudited

H1
2021

£'000

Unaudited

H1
2020

£'000

Audited

FY
2020

£'000

Management service fees

4,015

3,544

7,467

1,228

613

1,589

5,243

4,157

9,056

Corporate owned offices

1,027

634

1,360

628

428

890

1,655

1,062

2,250

 

5,042

4,178

8,827

1,856

1,041

2,479

6,898

5,219

11,306

Franchise fees

 

 

 

214

106

242

Other income

 

 

 

 

 

 

277

196

449

Franchise property division

 

 

 

 

 

7,389

5,521

11,997

Commission receivable on financial services

 

 

 

 

6,421

4,253

9,695

Financial services division

 

 

 

 

 

 

6,421

4,253

9,695

Total revenue

 

 

 

 

 

 

13,810

9,774

21,692

             

 

Gross profit for the two divisions is split as follows:

 

 

 

 

 

 

 

Unaudited

H1
2021

£'000

Unaudited

H1
2020

£'000

Audited

FY
2020

£'000

Property franchise division

 

 

 

7,389

5,521

11,997

Financial services division

 

 

 

 

 

 

1,558

1,199

2,799

Total gross profit

 

 

 

 

 

8,947

6,720

14,796

3 Dividends

The Company will pay an interim dividend of 4.0 pence per share (H1 2020: 3.4p), a cost of £1,449,000 (H1 2020: £1,193,000), on 29 October 2021 to the shareholders on the register on 17 September 2021.  The ex-dividend date is 16 September 2021.  

4 Taxation

Taxation has been calculated by applying the forecast full year effective rate of tax to the results for the period.  The March 2021 Budget commitment to increase corporation tax to 25% with effect from April 2023 was substantially enacted in May 2021.  As a result, deferred tax balances expected to reverse after April 2023 have been remeasured at 25%.  This gave rise to additional corporation tax charge of £345,000 being recognised in H1 2021.

5 Earnings per share

Basic earnings per share is calculated by dividing the profit after tax for the financial period by the weighted average number of ordinary shares deemed to be in issue in the period. The calculation of diluted earnings per share is derived from the basic earnings per share, adjusted to allow for the issue of shares under share option plans.

 

 

Unaudited
six months

ended
30 June
2021

Unaudited
six months

ended
30 June
2020

Audited

Year
Ended
31 December
2020

 

 

 

 

Profit for the financial period (£'000)

3,486

2,563

5,317

 

 

 

 

Weighted average number of ordinary shares - basic (#,000)

35,326

35,087

35,101

Weighted average number of ordinary shares - diluted (#,000)

37,285

37,072

36,314

 

 

 

 

Basic earnings per share (pence)

9.9p

7.3p

15.1p

Diluted earnings per share (pence)

9.3p

6.9p

14.6p

 

 

 

 

 

 

 

 

 

 



 

6 Reconciliation of profit before taxation to cash generated from operations

 

Unaudited

30 June
2021

Unaudited

30 June
2020

Audited

31 December
2020

 

£'000

£'000

£'000

 

 

 

 

Profit before taxation

4,767

3,164

6,670

Depreciation and amortisation charges

439

443

843

Share based payments

107

91

444

Impairment of franchisee loan book

-

58

68

Amortisation of debt costs

14

14

29

Finance costs

96

140

244

Interest paid on lease liabilities

7

9

17

Finance income

(90)

(94)

(181)

MAB share option recognition

-

-

(112)

 

5,340

3,825

8,022

 

(Increase)/decrease in trade and other receivables

 

(122)

 

(163)

 

(569)

Increase/(decrease) in trade and other payables

453

(23)

745

Cash generated from operations

5,671

3,639

8,198

 

7 Acquisitions

Nicholas Humphreys Acquisition

On 31 March 2021 Belvoir Group PLC acquired White Kite 2021 Limited and its subsidiaries White Kite Limited and Nicholas Humphreys Franchise Limited, which trade as Nicholas Humphreys, a network of 17 franchised and three corporate-owned estate and lettings agency offices.  The acquisition was part of the Group's ongoing multi-brand franchising strategy with the aim of increasing the Group's presence in the franchised property sector and opening up additional growth opportunities.  Professional fees associated with the acquisition of £129,000 have been expensed in H1 2021.

This transaction met the definition of a business combination and has been accounted for using the acquisition method under IFRS 3.  The assets and liabilities below are shown at their provisional fair values at acquisition. 

 

Total

£'000

Intangible assets

 

Trade names

211

Master franchise agreements

550

Tangible assets

33

Trade and other receivables

533

Cash and cash equivalents

254

Trade and other payables

(413)

Deferred tax liabilities

(190)

Identifiable net assets acquired

978

Goodwill on acquisition

3,422

Consideration - settled in cash

4,400

The goodwill represents the value attributable to the new businesses and the assembled and trained workforce. Deferred tax at 25% has been provided on the value of intangible assets defined as brand names and master franchise agreements.

 

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