Final Results
27/03/2023 07:00
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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 £33.7m (2021: £29.6m) with 12%
attributable to acquired businesses
• Management service fees (MSF) grew by 2% to £11.0m (2021:
£10.7m)
• Profit before tax was just 2% lower at £9.1m (2021: £9.3m), 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 £11.2m (2021: £9.7m) 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 £10.8m (2021: £10.3m)
• Year-end cash of £3.2m (2021: £7.4m) despite deploying £4.0m on
two corporate acquisitions
• Debt significantly reduced by £6.7m to £2.0m (2021: £8.7m)
leaving the Group in a net cash position of £1.2m (2021: net debt of £1.3m)
• 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 £0.05m
• Acquired The TIME Group, a network of 63 financial services
advisers, in May 2022 for £4.5m
• 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 £3.9m (2021: £1.2m) 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
(https://protect-eu.mimecast.com/s/T4ClC4zn6tY6wJvsOQc5u)
(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 (http://www.belvoirgroup.com)
finnCap +44 (0) 20 7220 0500
Julian Blunt, Teddy Whiley (Corporate Finance)
Tim Redfern, Charlotte Sutcliffe (ECM)
www.finncap.com (http://www.finncap.com)
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 £33.7m in 2022 marking Belvoir's 26(th) year of unbroken profit growth.
For further information, please visit: www.belvoirgroup.com
(http://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 £33.7m (2021: £29.6m) which was achieved
on the back of a 37% increase the year before. Group profit before tax was
marginally lower at £9.1m (2021: £9.3m) 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 £4.0m
on acquisitions in the year, is reporting a net cash position as at 31
December 2022 of £1.2m (2021: net debt of £1.3m). 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 £33.7m (2021: £29.6m), 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 £18.1m
(2021: £14.4m), 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 £15.6m (2021:
£15.2m). Management service fees (MSF), the key underlying return from
franchisees, were up 2% for the year to £11.0m (2021: £10.7m) and revenue
from corporate-owned offices was down 2% to £3.5m (2021: £3.6m) having
franchised out the Nicholas Humphreys Burton office in September 2022 in line
with our franchising strategy.
Lettings revenue increased by 5% to £11.2m (2021: £10.7m), 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 £3.3m (2021: £3.7m), 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 £3.9m (2021: £1.2m) 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 £121m (2021: £112m).
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 £33,500 (2014: £20,000) 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 £4.1m to £33.7m (2021: £29.6m).
Corporate acquisitions and disposals added net £3.6m, whilst revenue on a
like-for-like basis increased by £0.5m.
Revenue from the financial services division increased by £3.7m to £18.1m
(2021: £14.4m), of which £0.5m was on a like-for-like basis and £3.2m 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 £0.4m to £15.6m (2021: £15.2m).
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 £0.4m and in
franchise fees of £0.1m mitigated the reduction in revenue from sales of
£0.6m as the property market normalised. The additional £0.4m 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 £0.3m to £11.0m (2021: £10.7m) with £0.2m arising from Mr
and Mrs Clarke and the full-year ownership of the Nicholas Humphreys network.
Lettings MSF were up £0.4m to £8.6m (2021: £8.2m), of which £0.3m arose
from the underlying network. MSF from property sales were down £0.2m to
£2.3m (2021: £2.5m), having benefitted from £0.1m of additional sales MSF
from the Mr and Mrs Clarke network.
Income from corporate-owned offices was down £0.1m with a shortfall in sales
revenue of £0.3m being mitigated by an increase of £0.1m from lettings and
of £0.1m from the full year ownership of the Nicholas Humphreys network.
Revenue from franchise sales in 2022 was up £0.2m to £0.5m (2021: £0.3m).
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 £0.6m (2021: £0.6m).
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.
Revenue growth table 2021 Like-for-like basis Impact of 2022 acquisitions & disposals 2022 Total growth %
MSF
Lettings £8.2m £0.3m 3% £0.1m 2% £8.6m 5%
Sales £2.5m (£0.2m) (9%) £0.1m 3% £2.3m (6%)
Total MSF £10.7m £0.1m 0% £0.2m 2% £11.0m 2%
Corporate office income
Lettings £2.4m £0.1m 5% £0.0m 0% £2.6m 6%
Sales £1.2m (£0.3m) (29%) £0.1m 10% £1.0m (19%)
Total corporate office income £3.6m (£0.2m) (6%) £0.1m 4% £3.5m (2%)
Lettings (MSF and corporate) £10.7m £0.4m 4% £0.1m 1% £11.2m 5%
Sales (MSF and corporate) £3.7m (£0.6m) (15%) £0.2m 5% £3.3m (10%)
Franchise sales and other income £0.9m £0.1m 17% £0.1m 7% £1.1m 24%
Property division £15.2m £0.0m 0% £0.4m 2% £15.6m 2%
Financial services division £14.4m £0.5m 4% £3.2m 22% £18.1m 26%
Total Group revenue £29.6m £0.5m 2% £3.6m 12% £33.7m 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 £1.3m to £20.3m (2021: £19.0m) 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 £1.5m to £11.2m (2021: £9.7m).
Incremental overheads of £1.0m resulted from operating the acquired
businesses. The remaining increase of £0.5m in the underlying overheads
reflects additional staff costs of £0.4m and general overheads of £0.1m
associated with being fully back to normal operations post Covid-19 and
inflationary pressures.
Operating profit
Operating profit was at £9.0m (2021: £9.3m), 3% down on the prior year.
Profit before taxation
Profit before taxation of £9.1m (2021: £9.3m) is after interest receivable
on franchisee loans of £0.2m (2021: £0.2m), 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 £7.4m (2021: £7.4m).
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 £10.8m
(2021: £10.3m). The net cash inflow from operations was £9.6m (2021: £8.6m)
reflecting the enlarged Group.
The net cash used in investing activities was £3.4m (2021: £3.5m):
• On 23 September 2022 the sale of the Nicholas Humphreys Burton
corporate office generated proceeds of £0.7m.
• On 10 March 2022 the Company acquired the entire share capital of
Mr and Mrs Clarke Ltd for £0.05m cash consideration, net of cash acquired.
• On 23 May 2022 Brook Financial Services Ltd acquired the entire
share capital of The TIME Group for £4.0m cash consideration, net of cash
acquired.
• The cash outflow of franchisee loans granted was £0.9m (2021:
£0.8m) 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
£0.8m (2021: £1.0m).
• Interest received on the franchise loan book was £0.2m (2021:
£0.2m).
During 2022 £6.8m (2021: £0.9m) was repaid against the HSBC loan and
associated finance costs were £0.2m (2021: £0.2m). A further £0.2m (2021:
£0.2m) was paid in lease costs. Dividend payments totalled £3.2m (2021:
£3.3m of which £0.5m was a catch-up of the suspended final 2019 dividend
payment). As a result, net cash outflow from financing activities totalled
£10.4m (2021: £3.6m).
Liquidity and capital resources
At the year end the Group had cash balances of £3.2m (2021: £7.4m) and a
term loan of £2.0m (2021: £8.7m). 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 £1.0m 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 £0.6m (2021: £0.7m):
• 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 £2.0m (2021: £1.6m).
• 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 £2.1m (2021: £1.5m).
• 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 £0.7m (2021: £0.6m).
Financial position
The Group continues to operate from a sound financial platform with net assets
of £38.1m (2021: £33.6m), 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
Notes 2022 2021
£'000 £'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
Notes 2022 2021
£'000 £'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
Notes Share Share Share-based Revaluation Merger Retained Total
capital premium payments reserve reserve earnings equity
£'000 £'000 reserve £'000 £'000 £'000 £'000
£'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
Notes 2022 2021
£'000 £'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 £2.9m. The outstanding bank
loan of £2.0m as at the year-end was fully repaid on 1 March 2023 and the
Group has put in place an overdraft facility of £1.0m 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
£'000 £'000 £'000 £'000 £'000 £'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
£'000 £'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 £5,594,000 (2021: £7,418,000).
4 Share-based payments
Administrative expenses include a charge of £253,000 (2021: £223,000) 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
£'000 £'000
Final dividend for 2021
4.5p per share paid 30 May 2022 (2021: 5.1p per share paid 16 June 2021 1,678 1,796
included 1.3p catch-up on final 2019 dividend)
Interim dividend for 2022
4.0p per share paid 28 October 2022 (2021: 4.0p per share paid 29 October 1,492 1,492
2021)
Total dividend paid 3,170 3,288
The Directors propose a final dividend of 5.0p per share totalling £1,865,000
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
£'000 £'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
£'000 £'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 £47,000. 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 £4,488,000.
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 £42,000.
NF Worksop Mr and Mrs Clarke The TIME Total
Group
£'000 £'000
£'000
£'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 Mrs Clarke The TIME Total
Group
£'000
£'000
£'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 £35.7m and Group profit before tax would have
been £9.3m.
9 Post balance sheet event
On 1 March 2023 the Nicholas Humphreys Derby office was franchised to the
branch manager for £513,000.
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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