Interim Results
05/09/2022 07:00
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RNS Number : 1892Y Belvoir Group PLC 05 September 2022
5 September 2022
BELVOIR GROUP PLC
(the "Company", "Group" or "Belvoir")
Interim Results for the six months ended 30 June 2022
Growth strategy remains on track
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 2022.
Financial Highlights
· 12% increase in revenue to £15.4m (H1 2021: £13.8m), of which 1%
relates to the growth in the underlying business and 11% to corporate
acquisitions in 2021 and 2022
· 1% increase in Management Service Fees (MSF) to £5.3m (H1 2021:
£5.2m)
· 20% increase in Financial Services revenue to £7.7m (H1 2021:
£6.4m)
· Gross profit split of 60% lettings: 17% sales: 19% financial
services: 4% other (H1 2021: 56%, 21%, 18%, 5%) reverting to the pre-2021
ratio with a strong contribution from recurring lettings income
· Administrative costs up 29% to £5.4m (H1 2021: £4.2m) reflecting
the enlarged group and a return to a more normal cost base post-Covid
· Profit before tax of £4.0m (H1 2021: £4.8m)
· Basic earnings per share of 8.7p (2021: 9.9p)
· Unchanged interim dividend of 4.0p per share (H1 2021: 4.0p) payable
on 28 October 2022
· H1 results in line with management's expectations
Operational Highlights
· Acquisition of The TIME Group, a network of 63 highly motivated
financial services advisers, for £3.8m net cash on 23 May 2022, funded from
existing cash reserves
· Acquisition of Mr and Mrs Clarke, a specialist concierge-style
personal estate agency business operating through 10 partners, for £0.05m on
11 March 2022, funded from existing cash reserves
· Nine (H1 2021: five) franchisee assisted acquisitions completed in
the year to date contributing £2.2m (H1 2021: £1.3m) of acquired
franchisee turnover
Dorian Gonsalves, Chief Executive Officer of Belvoir Group, commenting on the
performance and outlook, said:
"I am delighted to report that our strong lettings base, investment in further
franchise networks and diversification into financial services have all helped
to mitigate the correction in the level of property sales transactions after
the exceptional year for the housing market in 2021.
"During the first half of 2022 the Board continued to pursue its growth
strategy to strengthen the Group's service offering. The acquisition of Mr
and Mrs Clarke provided the Group with a platform from which to develop its
personal agency model, and the acquisition of The TIME Group added a further
63 advisers to our already established and successful financial services
network.
"The Group's investment in businesses to expand both the property and the
financial services divisions, and the strong pipelines of house sales and
related mortgages at the start of H2, underpin the Board's confidence of
achieving managements' expectations for the full financial 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
(https://www.investormeetcompany.com/belvoir-group-plc/register-investor)
For further details:
Belvoir Group PLC 01476 584900
Dorian Gonsalves, Chief Executive Officer investorrelations@belvoirgroup.com (mailto:investorrelations@belvoirgroup.com)
Louise George, Chief Financial Officer
www.belvoirgroup.com (https://www.belvoirgroup.com/)
finnCap +44 (0) 20 7220 0500
Julian Blunt & Teddy Whiley (Corporate Finance)
Tim Redfern (ECM)
www.finncap.com (http://www.finncap.com)
Buchanan +44 (0) 20 7466 5000
Charles Ryland, Kim van Beeck & George Cleary
Notes:
About Belvoir Group PLC
Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a
nationwide property franchise group with 473 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 73,300 properties and reported record revenues
of £29.6m in 2021 marking Belvoir's 25(th) 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 2022.
Performance
Given the stamp duty holiday and the post-lockdown pent-up demand last year,
2021 was always going to be a hard act to follow for the UK property sector.
Despite the correction in the housing market, H1 revenue was up 12% to
£15,403,000 (H1 2021: £13,810,000). Growth in underlying lettings and
financial services revenue streams more than mitigated the lower level of
house sales as the housing market returned to more normal transaction levels
to give organic growth of 1%. Meanwhile, the Group's acquisition strategy
added a further 11% revenue growth.
Profit before tax was 16% lower at £3,995,000 (H1 2021: £4,767,000) with
administrative costs up 29% to £5,368,000 (H1 2021: 4,167,000) as a result of
the enlarged Group; the cost base returning to normal by comparison with H1
2021 when Belvoir's teams were almost entirely working from home; and
inflationary increases.
Property division
Revenue from the property division increased by 4% to £7,666,000 (H1 2021:
£7,389,000). The Group has continued to expand its franchise property network
and service offering through the strategic acquisition of Mr and Mrs Clarke, a
specialist concierge-style personal estate agency business operating through
10 partners and associates, predominantly in Warwickshire, South Wales, the
Midlands and North London. This will provide the Group with a platform from
which to develop its personal agency model.
The assisted acquisition growth strategy is getting back on track following
two years during which there was a lack of good opportunities. In the year
to date our franchisees have completed on nine (H1 2021: five) assisted
acquisitions adding 1,817 (H1 2021: 790) properties under management. The
Group grew its footprint by opening in six new territories, three of which are
operated by personal agents within the Mr and Mrs Clarke network, and three
are a result of our assisted acquisitions strategy. There have also been
nine resales of existing franchises, two of which have been acquired by new
franchise owners and seven by existing franchise owners.
The property division totals 373 offices, including 36 dual-branded Nottingham
Building Society branches and ten partners and associates operating as
personal agents under the Mr and Mrs Clarke brand, and has a portfolio of
73,300 (H1 2021: 71,600) managed properties.
The housing market continues to be characterised by limited supply and strong
demand, so whilst the "race for space" has eased in 2022, there remains a
shortage of available property both to buy and to rent that has continued to
put pressure on house prices and rental costs. This resulted in annual UK
house price inflation to June 2022 of 7.8% (June 2021: 13.2%) and UK annual
rental growth to June 2022 of 3.0% (June 2021: 1.8%) with rents on new
tenancies reportedly up by around 10% UK-wide. UK house transaction levels
in H1 2022 were down 29% by comparison to H1 2021, but 8% up compared with H1
2019. Against this backdrop, H1 sales revenue from the underlying Belvoir
business was down 21% and lettings revenue was up 3%. At the end of June,
pipelines of agreed sales transactions remained high with the timescales
between the sale subject to contract and completion increasing to 17 weeks or
more but the lack of available properties ensuring that fall-through rates
remain low.
The normalisation in the number of house sales transactions resulted in the
Group's ratio of lettings to sales returning to a more typical 78:22 in H1
2022 (H1 2021: 73:27) reflecting the strong recurring lettings business that
underpins the Group's performance.
Financial services division
Revenue from the financial services division increased by 20% to £7,737,000
(H1 2021: £6,421,000) with growth of 6% on a like-for-like basis and 14% from
the acquisition of Nottingham Mortgage Services in July 2021 and The TIME
Group on 23 May 2022. At the end of June, Belvoir's network of advisers had
grown to 301 (H1 2021: 221), including 63 TIME mortgage advisers. The level
of written mortgage business in H1 2022 is up 15% but the longer timescales to
complete on house sales has delayed the conversion to banked income so, as
with property sales, the pipeline of written mortgages remains high.
The mix of mortgage products arranged reflects the lower number of house sales
transactions with the ratio of purchases to remortages reverting to a more
normal 61:39 (H1 2021: 72:28) and the financial services division benefitting
from having a substantial client base, along with continued client
recommendations.
Board Changes
Michael Stoop, non-executive Chairman, will be stepping down from the Board
with effect from 30 September 2022 in order to focus on his other business
interests. Jon Di-Stefano, who was appointed as a non-executive to the Board
in April 2022, will take over the role of non-executive Chairman. The
Board would like to thank Michael for his strategic stewardship of the Group,
especially through the pandemic, which drew heavily on his deep understanding
of both franchising and the property sector.
Outlook
Current pipelines of house sales and mortgages, and the ongoing demand for
property, both to buy and to rent, underpin the Board's confidence in
Belvoir's performance for the second half of the year. Whilst there has been
an expected correction in the first half of 2022, the housing market has
remained resilient. However, households are now facing the headwinds of
higher inflation, mortgage rates and rent, and there has been no obvious
increase in the supply of houses to the market that would otherwise have eased
this upward pressure.
The lettings market remains active with strong demand from tenants. Whilst
affordability is a key issue for renters, the average proportion of gross
income that households are spending on their rent for tenancies starting in
July 2022 was 30.2%, largely unchanged for the last four years. The higher
rents being achieved have encouraged landlords to invest in property resulting
in buy-to-let house purchase mortgages running above their pre-pandemic
levels, although there is a still comparatively weak supply of new rental
properties.
The mortgage market has a strong pipeline of written business. The lower
number of house purchase mortgages has been mitigated by an increase in the
average value of these transactions due to house price inflation and an
increase in remortgage activity. Rising mortgage rates have prompted many
homeowners to opt for longer-term fixed-rate products to insulate themselves
from expected further interest rate increases. At the same time there has
been less product transfer activity as current product terms are less
favourable than those already in place for most mortgage-holders. One
significant change for the mortgage market is the Bank of England's decision
to remove the "affordability test", such that lenders will no longer be
required to assess affordability against a 3% interest rate rise stress
test.
The Group's business model benefits greatly from its diversification into
financial services, the recurrent nature of its significant lettings revenue
streams and its acquisition strategy of adding earnings enhancing businesses
to the Group that extend its reach and breadth of services, funded from cash
reserves. The Board remains committed to further acquisitions of businesses
that meet its strategic investment criteria.
Having reported H1 profitability in line with our start of year expectations
and given the strong pipelines of agreed house sales and mortgages at the end
of H1, the Board is confident of achieving its expectations for the full
year.
Dorian Gonsalves
Chief Executive Officer
Financial Review
Revenue
Group revenue in the first six months of 2022 was up 12% to £15,403,000 (H1
2021: £13,810,000), an increment of £1,593,000 of which £111,000 represents
like-for-like growth and £1,482,000 reflects the growth arising from the
acquisition of the Nicholas Humphreys network and Nottingham Mortgage Services
in 2021 and of Mr and Mrs Clarke and The TIME Group in 2022.
Our property franchise division increased revenue by £277,000 to £7,666,000
(H1 2021: £7,389,000). Additional revenue from the acquired networks was
£589,000 more than mitigating the reduction of £312,000 in the underlying
business. The anticipated reduction in sales activity following the stamp
duty-fuelled frenzy of 2021 saw revenue from property sales in the underlying
business fall by £382,000, whilst revenue from lettings increased by
£151,000.
Management Service Fees, our key underlying income stream from franchisees,
increased by 1% to £5,289,000 (H1 2021: £5,243,000) with an increase from
lettings of 5% to £4,212,000 (H1 2021: £4,015,000) offsetting the 12%
reduction from sales to £1,077,000 (H1 2021: £1,228,000). Overall H1 MSF
growth of £47,000 was the net effect of acquired MSF of £132,000 and a
reduction in the underlying MSF of £85,000.
Revenue from our corporate-owned offices increased by £314,000 to £1,969,000
(H1 2021: £1,655,000). An increase of £459,000 arose from the additional
three months ownership of the three acquired Nicholas Humphreys corporate
offices. Meanwhile, activity in the two pre-existing corporate offices fell
by £145,000 also reflecting the reduced sales activity.
In the year to date, nine (H1 2021: five) existing franchise owners have
completed on an acquisition of a local competitor under our assisted
acquisitions programme. The total deal value was £2,540,000 (H1 2021:
£1,308,000) of which £510,000 (H1 2021: £143,000) was funded by a Central
Office loan. Based on their historic results, these acquisitions should add
approximately £2.2m p.a. (H1 2021: £1.1m p.a.) to our franchisee network
revenue, which would increase Group revenue through annualised recurring MSF
by £260,000 with a contribution of around £130,000 to MSF expected in
2022.
Franchise fees and other income, including insurance, conveyancing and other
commissions, and fees for other services to franchisees, contributed £408,000
(H1 2021: £491,000). Nine franchise offices changed hands under our resales
programme, two of which were acquired by new franchise owners joining the
Group, and seven by existing, adjacent franchisees.
Revenue from our financial services division was up £1,316,000 to £7,737,000
(H1 2021: £6,421,000) with the acquired financial services businesses adding
£894,000 and growth of £422,000 in the underlying business. The number of
written mortgages was up 15% to 9,639 (H1 2021: 8,351) with, as expected,
remortgages accounting for a larger proportion of the mortgages written as
evidenced by the change in the ratio of house purchase to remortgages of 61:39
(H1 2021: 72:28).
Gross profit
Gross profit increased by 5% to £9,403,000 (H1 2021: £8,947,000) which
reflected 4% growth in the property division and 12% growth from financial
services. Overall, acquisitions in 2021 and 2022 added 9% with gross profit
from the underlying business decreasing by 4% as expected.
With revenue from financial services growing at a faster pace than from the
property division, the sales mix of property to financial services has changed
to 50:50 (H1 2021: 54:46) resulting in a lower overall gross profit margin of
61% (H1 2021: 65%). Within the property division 100% of revenue falls
through to gross profit whereas revenue from financial services is subject to
commission payable to advisers. The gross profit margin from financial
services was lower at 22% (H1 2021: 24%) which continued to reflect the shift
towards independent Business Partners within the financial services network,
who are more self-sufficient but earn a higher rate.
The gross profit split of 60% lettings: 17% sales: 19% financial services: 4%
other (H1 2021: 56%, 21%, 18%, 5%) reflects a return to more normal trading
levels.
Administrative expenses
Administrative expenses increased by £1,201,000 to £5,368,000 (H1 2021:
£4,167,000). Incremental overheads of £712,000 resulted from operating the
acquired businesses with a further increase of £49,000 in amortisation of
acquired intangibles and £62,000 in one-off professional costs. The
share-based payment cost increase of £109,000 reflected the awards made in
June 2021. The remaining increase of £269,000 in the underlying overheads
represents a 5% uplift in staff costs and a 14% increase in operating costs
associated with being fully back in the office and able to engage with our
various stakeholders on both a face-to-face and virtual basis.
Profit before taxation
Profit before taxation for the period was £3,995,000 (H1 2021: £4,767,000)
as forecast given the lower volume of property sales transactions anticipated
following the exceptionally strong market in 2021, and the increase in
operating costs as the business returns to normal following the H1 2021
lockdown.
Taxation
The effective rate of corporation tax for the period was 19% (H1 2021: 27%).
The higher effective rate of corporation tax in 2021 arose as a result of
remeasuring deferred tax balances expected to reverse after April 2023 at
25%. This gave rise to an additional corporation tax charge of £345,000
being recognised in H1 2021.
Profit after taxation
For the reasons outlined above, profit after taxation for the period was down
7% to £3,226,000 (H1 2021: £3,486,000).
Earnings per share
Basic earnings per share was down 12% to 8.7p (H1 2021: 9.9p) based on an
average number of shares in issue in the period of 37,292,000 (H1 2021:
35,326,000). Similarly, the diluted basic earnings per share was down 9% to
8.5p (H1 2021: 9.3p) based on an average number of shares in issue in the
period of 37,922,000 (H1 2021: 37,285,000). See note 5 to the interim
statements for detailed EPS calculations.
Dividend
The Board is pleased to announce an interim dividend of 4.0p (H1 2021: 4.0p)
payable to shareholders on 28 October 2022 based upon the register on 16
September 2022. The ex-dividend date will be 15 September 2022.
Cash flow
The Group continues to achieve a high conversion of cash from operation with
97% (H1 2021: 109%) of EBITDA converting to cash of £4,379,000 (H1 2021:
£5,671,000). Net cash inflow from operating activities after taxation was
£3,988,000 (H1 2021: £4,843,000).
On 11 March 2022 the Group completed on the acquisition of Mr and Mrs Clarke
Limited, a personal agent-style estate agency network, for £47,000 cash
consideration. A further £176,000 of funds was used to settle outstanding
loans.
On 23 May 2022. The Group completed on the acquisition of The TIME Group Ltd,
a network of 63 mortgage advisers, for £3,815,000 initial cash
consideration. Further consideration of up to £700,000 is payable
contingent on results for the year to 31 July 2022.
Liquidity and capital resources
The Group had cash balances of £5,748,000 (H1 2021: £5,183,000) and a term
loan of £8,297,000 (H1 2021: £9,158,000) leaving net debt of £2,549,000 (H1
2021: £3,975,000). The term loan bears interest at 1.95% over the LIBOR
rate and is repayable in a payment of £445,000 on 31 December 2022 and a
final repayment of £7,868,000 in March 2023. It is anticipated that, given
the cash generative nature of the business, the final repayment can be made
from forecast cash reserves. However, HSBC are supportive of providing
further loan facilities should management deem this necessary.
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 2022, the Group was comfortably inside its bank covenants with
the debt service cover at 6.9x times (H1 2021: 6.6x). Recent acquisitions
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 £2,902,000 (H1 2021: £3,423,000), 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 long term 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 2022
Notes Unaudited Unaudited Audited
Six months
Six months
Year
ended
ended
ended
30 June
30 June
31 December
2022
2021
2021
£'000 £'000 £'000
Revenue 2 15,403 13,810 29,647
Cost of sales (5,999) (4,863) (10,602)
Gross profit 9,404 8,947 19,045
Administrative expenses (5,368) (4,167) (9,705)
Operating profit 4,036 4,780 9,340
Finance costs (123) (103) (211)
Finance income 82 90 167
Profit before taxation 3,995 4,767 9,296
Taxation 4 (769) (1,281) (1,912)
Profit and total comprehensive income for the financial period 3,226 3,486 7,384
Profit for the period attributable to the equity holders of the parent company 3,226 3,486 7,384
Basic earnings per share from continuing operations 5 8.7 9.9p 20.4p
Diluted basic earnings per share from continuing operations 5 8.5 9.3p 20.3p
Consolidated Statement of Financial Position
As at 30 June 2022
Unaudited Unaudited Audited
At At At
30 June
30 June
31 December
2022
2021
2021
£'000 £'000 £'000
Assets
Non-current assets
Intangible assets 37,800 33,837 34,761
Property, plant and equipment 531 513 501
Right-of-use assets 596 389 699
Trade and other receivables 1,996 2,178 1,788
40,923 36,917 37,749
Current assets
Trade and other receivables 6,483 5,692 5,605
Cash and cash equivalents 5,748 5,183 7,413
12,231 10,875 13,018
Total assets 53,154 47,792 50,767
Liabilities
Non-current liabilities
Interest bearing loans and borrowings - 8,297 7,867
Lease liabilities 434 242 522
Deferred tax 2,757 1,951 2,872
3,191 10,490 11,261
Current liabilities
Trade and other payables 5,306 4,620 4,526
Interest bearing loans and borrowings 8,297 861 861
Lease liabilities 177 157 191
Tax payable 776 1,063 281
14,556 6,701 5,859
Total liabilities 17,747 17,191 17,120
Total net assets 35,407 30,601 33,647
Equity
Shareholders' equity
Share capital 373 362 373
Share premium 13,159 12,647 13,159
Share-based payment reserve 450 1,075 238
Other components of equity 162 162 162
Merger reserve (5,774) (5,774) (5,774)
Retained earnings 27,037 22,129 25,489
Total equity 35,407 30,601 33,647
Consolidated Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2022
Share capital Share Share- based payment reserve Merger Other components of equity Retained Total
premium
reserve
earnings
equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2021 (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
Share-based payments - - 116 - - - 116
Transfer upon exercise or cancellation of share options - - (953) - - 953 -
Issue of equity share capital 11 512 - - - - 523
Dividends - - - - - (1,491) (1,491)
Transactions with owners 11 512 (837) - - (538) (852)
Profit and total comprehensive income for the six month period - - - - - 3,898 3,898
Balance at 31 December 2021 (Audited) 373 13,159 238 (5,774) 162 25,489 33,647
Share-based payments - - 212 - - - 212
Dividends - - - - - (1,678) (1,678)
Transactions with owners - - 212 - - (1,678) (1,466)
Profit and total comprehensive income for the six month period - - - - - 3,226 3,226
Balance at 30 June 2022 (Unaudited) 373 13,159 450 (5,774) 162 27,037 35,407
Consolidated Statement of Cash Flows
For the six months ended 30 June 2022
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2022
2021
2021
( £'000 £'000 £'000
Operating activities
Cash generated from operating activities 6 4,379 5,671 10,338
Tax paid (391) (828) (1,782)
Net cash flows generated from operating activities 3,988 4,843 8,556
Investing activities
Capital expenditure on property, plant and equipment (75) (26) (101)
Sale of assets held for sale - 591 591
Acquisitions net of cash acquired (3,005) (4,146) (4,374)
Franchisee loans granted (666) (684) (796)
Loans repaid by franchisees 362 503 1,015
Finance income 78 90 167
Net cash (used in)/from investing activities (3,306) (3,672) (3,498)
Financing activities
Finance costs (113) (103) (211)
Loan repayments (445) (445) (890)
Lease repayments (111) (85) (221)
Proceeds from share issue - 508 1,031
Equity dividends paid (1,678) (1,797) (3,288)
Net cash used in financing activities (2,347) (1,922) (3,579)
Net change in cash and cash equivalents (1,665) (751) 1,479
Cash and cash equivalents at the beginning of the financial period 7,413 5,934 5,934
Cash and cash equivalents at the end of the period 5,748 5,183 7,413
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 2022 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 2021 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 2 September 2022.
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 2022 Annual Report and
Accounts and there are not expected to be any changes in the accounting
policies compared to those applied at 31 December 2021.
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 2022 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 Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited
H1 H1 FY H1 H1 FY H1 H1 FY
2022
2021
2021
2022
2021
2021
2022
2021
2021
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Management service fees 4,212 4,015 8,227 1,077 1,228 2,483 5,289 5,243 10,710
Corporate owned offices 1,442 1,027 2,431 527 628 1,200 1,969 1,655 3,631
5,654 5,042 10,658 1,604 1,856 3,683 7,258 6,898 14,341
Franchise fees 215 214 314
Other income 193 277 555
Franchise property division 7,666 7,389 15,210
Financial services division 7,737 6,421 14,437
Total revenue 15,403 13,810 29,647
Gross profit for the two divisions is split as follows:
Unaudited Unaudited Audited
H1 H1 FY
2022
2021
2021
£'000 £'000 £'000
Property franchise division 7,666 7,389 15,210
Financial services division 1,738 1,558 3,835
Total gross profit 9,404 8,947 19,045
3 Dividends
The Company will pay an interim dividend of 4.0 pence per share (H1 2021:
4.0p), a cost of £1,492,000 (H1 2021: £1,449,000), on 28 October 2022 to the
shareholders on the register on 16 September 2022. The ex-dividend date is
15 September 2022.
4 Taxation
Taxation has been calculated by applying the forecast full year effective rate
of tax to the results for the period. As a result of the March 2021 Budget
commitment to increase corporation tax to 25% with effect from April 2023,
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 Unaudited Audited
six months
six months
Year
ended ended
Ended
30 June
30 June
31 December
2022
2021
2021
Profit for the financial period (£'000) 3,226 3,486 7,384
Weighted average number of ordinary shares - basic (#,000) 37,292 35,326 36,142
Weighted average number of ordinary shares - diluted (#,000) 37,922 37,285 36,434
Basic earnings per share (pence) 8.7p 9.9p 20.4p
Diluted earnings per share (pence) 8.5p 9.3p 20.3p
6 Reconciliation of profit before taxation to cash generated from operations
Unaudited Unaudited Audited
30 June 30 June 31 December
2022
2021
2021
£'000 £'000 £'000
Profit before taxation 3,995 4,767 9,296
Depreciation and amortisation charges 491 439 967
Share-based payments 212 107 223
Impairment of franchisee loan book - - 85
Amortisation of debt costs 14 14 29
Finance costs 113 96 191
Interest paid on lease liabilities 10 7 20
Finance income (82) (90) (167)
4,753 5,340 10,644
(Increase)/decrease in trade and other receivables 613 (122) (186)
Increase/(decrease) in trade and other payables (987) 453 (120)
Cash generated from operations 4,379 5,671 10,338
The movement in trade and other receivables included £1,391,000 and the
movement in trade and other payables included £910,000 in relation to
acquisitions in the period.
7 Acquisitions
Mr and Mrs Clarke Acquisition
On 11 March 2022 Belvoir Group PLC acquired Mr and Mrs Clarke Ltd ("MMC"), a
network of personal estate agents operating through 10 partners and
associates. The acquisition provides a platform from which to build the
Group's personal agency model.
The TIME Group Acquisition
On 23 May 2022 Belvoir Group PLC acquired The TIME Group Ltd ("TIME"), a
network of 63 mortgage advisers.
Professional fees associated with the above acquisitions of £192,000 have
been expensed in H1 2022.
These transactions 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.
MMC TIME Total
£'000 £'000 £'000
Intangible assets
Tangible assets 48 2 51
Trade and other receivables 62 1,329 1,391
Cash and cash equivalents - 403 403
Trade and other payables (244) (666) (910)
Identifiable net assets/(liabilities) acquired (134) 1,068 934
Goodwill on acquisition 181 3,150 3,331
Consideration 47 4,218 4,265
Consideration settled in cash 47 3,361 3,408
Deferred consideration - 857 857
Total consideration 47 4,218 4,265
The goodwill represents the value attributable to the new businesses and the
assembled and trained workforce. Further consideration of up to £700,000 is
payable contingent on results for the year to 31 July 2022.
8 Borrowings
H1 2022 H1 2021 FY 2021
£'000 £'000 £'000
Bank loans - term loan
Current 8,297 861 861
Long term - 8,297 7,867
Bank loans- total 8,297 9,158 8,728
Less: cash and cash equivalents (5,748) (5,183) (7,413)
Net debt 2,549 3,975 1,315
Borrowings comprise a term loan of £8,297,000 (H1 2021: £9,158,000) secured
by a fixed and floating charge over the Group assets which bears interest at
1.95% over the Bank of England base rate and is repayable £445,000 on 31
December 2022 and a final payment of £7,868,000 in March 2023. It is
anticipated that, given the cash generative nature of the business, the final
repayment can be made from forecast cash reserves. However, HSBC are
supportive of providing further loan facilities should management deem this
necessary.
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