Interim Results

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.

"T he 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

For further details:

Belvoir Group PLC Dorian Gonsalves, Chief Executive Officer Louise George, Chief Financial Officer www.belvoirgroup.com	01476 584900 [e-mail]
finnCap Julian Blunt & Teddy Whiley (Corporate Finance) Tim Redfern (ECM) www.finncap.com		[phone]
Buchanan Charles Ryland, Kim van Beeck & George Cleary	[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 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 Six months ended 30 June 2022	Unaudited Six months ended 30 June 2021		Audited Year ended 31 December 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 At 30 June 2022	Unaudited At 30 June 2021	Audited At 31 December 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
T otal  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 premium	Share- based payment reserve	Merger reserve	Other components of equity	Retained earnings	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 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 30 June 2022	Unaudited 30 June 2021	Audited 31 December 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 H1 2022 £'000	Unaudited H1 2021 £'000		Audited FY 2021 £'000	Unaudited H1 2022 £'000		Unaudited H1 2021 £'000	Audited FY 2021 £'000	Unaudited H1 2022 £'000		Unaudited H1 2021 £'000	Audited FY 2021 £'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 H1 2022 £'000	Unaudited H1 2021 £'000	Audited FY 2021 £'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 six months ended 30 June 2022	Unaudited six months ended 30 June 2021	Audited Year Ended 31 December 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 30 June 2022	Unaudited 30 June 2021	Audited 31 December 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 £'000	TIME £'000	Total £'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 £'000	H1 2021 £'000	FY 2021 £'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.

 

END

 

 

IR BKQBNFBKDQCK