Earnings Accretive Acquisition

RNS Number : 2231U

Belvoir Group PLC

01 April 2021

 

This announcement contains inside information.  

Final

1 April 2021

BELVOIR!

BELVOIR GROUP PLC

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

Earnings Accretive Acquisition

Belvoir Group PLC (AIM:BLV), one of the UK's largest property franchise groups, is pleased to announce that it has acquired the entire issued share capital of White Kite Holdings 2021 Limited and its two subsidiaries, White Kite Limited and Nicholas Humphreys Franchise Limited (collectively referred to as "Nicholas Humphreys"), for a total consideration of £4.0 million satisfied in cash from existing cash resources ("the Acquisition"). 

Nicholas Humphreys operates a national network of estate and lettings agents trading through 18 franchised and three corporate-owned offices, and is a full member of the British Franchise Association (BFA).  In addition to offering professional lettings and property sales, Nicholas Humphreys specialises in student lettings, giving an overall revenue split of 87% lettings and 13% sales.  Its portfolio of 6,510 managed units provides a strong underlying recurring revenue stream.

The Nicholas Humphreys franchise network extends from Portsmouth to Durham, and across from Stoke-on-Trent to Norwich, providing lettings in mainly University towns. Its three corporate-owned offices are based in the East Midlands, relatively close to Belvoir's Central Office in Grantham.

The key strategic driver for the Acquisition is that, like the Belvoir Group, Nicholas Humphreys is based on a franchise model underpinned by lettings, making it a good fit for Belvoir's multi-brand franchise strategy.  The Nicholas Humphreys brand will operate alongside the Group's other brands: Belvoir, Northwood, Newton Fallowell and Lovelle. The Board anticipates the following opportunities arising from the Acquisition:

· Expand the product offering, by introducing sales to the lettings-only franchise offices

· Improve the financial services offering with support from Brook Financial Services, another Belvoir Group subsidiary

· Enhance the legal, compliance, marketing, IT and general support to franchisees through the Belvoir central franchise support system

· Offer the opportunity for accelerated growth under Belvoir's Assisted Acquisitions programme

During the first quarter of 2021, the White Kite Group was restructured to remove the Nicholas Humphreys Loughborough business, this being the original office, which Nick Humphreys intends to continue operating. In the year to 31 March 2020, based on unaudited accounts, trading from Nicholas Humphreys, as acquired, generated revenue of £2.8 million and operating profit of £1.0 million, and at that date had net assets of approximately £100,000.  The Acquisition is expected to be earnings accretive in 2021.  The Board will consider longer term whether to pursue a strategic franchise solution for the corporate-owned offices in accordance with its franchise business model.   

Having incorporated Nicholas Humphreys into the Group, Belvoir will be operating through a network of 439 businesses across six distinct brands with a combined portfolio of 71,787 managed properties.

Dorian Gonsalves, CEO of Belvoir, commented :

"The acquisition of Nicholas Humphreys demonstrates again that Belvoir is delivering on its strategic objective of investing in successful franchise businesses that are aligned with our multi-brand franchise model, where there is scope for further growth as part of the Group.  With its bias towards lettings, the Nicholas Humphreys business is underpinned by a strong recurring revenue stream, whilst offering the opportunity to roll out Belvoir's existing expertise in sales and financial services across the network.  Having funded the Acquisition from cash reserves, it will be immediately earnings accretive, driving enhanced returns for our shareholders.

"The business, founded in 1998, is a real credit to Nick Humphreys, who has built it into a highly successful franchise operation with full BFA accreditation.  We extend a warm welcome to the Nicholas Humphreys staff and franchisees, and believe that as part of the Belvoir Group, we can strengthen further the offering to the Nicholas Humphreys franchises enabling them to achieve their own business growth potential."

Nick Humphreys, Managing Director, commented:

"I would like to take this opportunity to thank our franchisees and staff for their part in building Nicholas Humphreys into the recognised brand that it is today.  I have known for some time that Belvoir would be the right home for the Nicholas Humphreys network.  Belvoir has the experience of both lettings and franchising to provide the necessary professional support to our franchisees and I look forward to seeing the network flourish as part of the Belvoir Group."

For further details:

Belvoir Group PLC Dorian Gonsalves, Chief Executive Officer Louise George, Chief Financial Officer www.belvoirgroup.co m	01476 584900 [e-mail]
finnCap Julian Blunt, Teddy Whiley (Corporate Finance) Tim Redfern (ECM) www.finncap.com		[phone]
Buchanan Charles Ryland, Kim Looringh-van Beeck & Tilly Abraham	[phone]

Notes:

About Belvoir Group PLC

Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a nationwide property franchise group with 439 offices across six brands specialising in residential lettings, property management, residential sales and property-related financial services.  With its Central Office in Grantham, Lincolnshire, the Group manages 71,787 properties and in 2019 reported record revenues of £19.3m and achieved its 23^rd year of unbroken profit growth.

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

 

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