Trading Update and Notice of Preliminary Results

Belvoir

31/01/2023 07:00

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RNS Number : 3192O  Belvoir Group PLC  31 January 2023

This announcement contains inside information.

   31 January 2023

 

BELVOIR!
 

BELVOIR GROUP PLC

(the "Company" or "Belvoir" or "Group")

 

Trading Update and Notice of Preliminary Results

FY22 trading is up on managements' expectations

 

 

Belvoir Group PLC (AIM:BLV), a leading UK property franchise and financial
services Group, is pleased to provide the following pre-close trading update
for the year ended 31 December 2022.

 

Group revenue increased to a record level, up 13% to £33.5m* (2021:
£29.6m).  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, and rents on new
tenancies increasing by 10.8% during the year.  Consequently, Belvoir's
financial performance for the year, including profit before tax, is
anticipated to be slightly ahead of managements' expectations.

 

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.  Since being acquired in May and March 2022
respectively, TIME has already contributed revenue of £2.6m and MMC has
gained further traction in recruiting agents into six new territories.

 

Revenue from the financial services division increased by 24% to £17.9m*
(2021: £14.4m), with the network of financial advisers increasing by 21% to
294 (2021: 243).  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 re-mortgages
increasing as interest rates started to rise.

 

Revenue from the property division was up 1% to £15.5m* (2021: £15.3m) with
the lettings to sales ratio at 77:23 (2021: 74:26).  Management service fees
("MSF"), the key underlying return from franchisees, continued to grow, up 2%
for the year to £10.9m* (2021: £10.7m) with the stronger lettings market
more than mitigating lower sales activity. Furthermore, the Group's highly
successful assisted acquisitions strategy regained momentum following two
years of subdued activity due to Covid, and enabled franchisees to complete on
14 (2021: 7) assisted acquisitions, which added £3.9m p.a. (2021: £1.2m) in
franchisee revenue.

 

The highly cash generative nature of the Group's operating activities,
underpinned primarily by the recurring lettings business, enabled the Group to
move into a positive net cash position of £1.1m* at the year-end (2021:
£1.3m net debt), despite having deployed £4.0m of cash on corporate
acquisitions.

 

The mini budget in September 2022 created a high degree of uncertainty within
the property and related financial services markets.  Between August and
December, base rates doubled from 1.75% to 3.5% which 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 on instruction levels
for house sales and demand for mortgages in Q4 which will in turn impact
trading in H1 of 2023.  At the same time, borrowers with mortgage offers were
keen to complete on their house purchases before their offer expired,
resulting in the level of fall-through of transactions in Q4 being minimal.

 

The Autumn statement reversed many of the fiscal initiatives proposed in the
mini budget, which somewhat reassured borrowers and lenders.  Whilst the
level of sales instructions and mortgage applications to date in 2023 have
shown signs of improvement compared with Q4 2022, the recovery is expected to
build slowly over the year.  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 in H1 is not likely to flow
through into financial performance until H2.  As a result, profitability in
2023 as a whole is likely to be slightly below 2022 and is expected to return
to an upward trend in 2024.

 

 

Dorian Gonsalves, CEO, commented:

 

"I am delighted to report that during 2022 our acquisition strategy both at
Group and at franchisee level enabled Belvoir to both extend its service
offering and mitigate the lower level of activity in the housing market
following the exceptionally strong conditions in 2021.

 

"Our property franchisees and financial services advisers are highly motivated
entrepreneurs who continue to 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.

 

"Whilst we anticipate continuing challenging market conditions in 2023, we
remain confident that the resilience and diversity of our business model will
enable the Group to perform well against the market as a whole.  As always,
the Board will continue to identify suitable acquisition targets to support
continued growth and enhance shareholder value still further."

 

Notice of Full Year Results

 

The audited results for the financial year ended 31 December 2022 will be
announced on Monday, 27 March 2023.

 

*unaudited

 

For further details:

 

 Belvoir Group PLC                                     01476 584900

 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 463 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 72,900 properties and reported record revenues
of £29.6m in 2021 marking Belvoir's 25(th) year of unbroken profit growth.

For further information, please visit: www.belvoirgroup.com

 

 (http://www.belvoirgroup.com)

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