Belvoir expands through further acquisitions in first half

Belvoir, the British property franchise, has reported a successful first half due to revenue contributions from three new acquisitions.

Profit before tax rose by 69% to £1.3m as group revenue rose 60% to £4.3m and like-for-like revenue increased by 10%.

The firm acquired Northwood, the largest remaining property franchise network with 86 letting agencies, in June this year. The takeover, which accounted for £0.2m of exceptional costs, was funded by £6m of bank debt and £3m from equity fund-raising.

In 2015 the firm launched its multi-brand franchising strategy by acquiring two companies, Newton Fallowell Limited and Goodchilds Estate Agents and Lettings. The former, acquired in July 2015, is an East Midlands-based network of 31 outlets and the later, acquired in October 2015, is a West Midlands-based network of 14 outlets.

The company’s core revenue was derived from management service fees (MSF) through offering franchisees support and advice. MSFs increased by 46% at £2.6m following the acquisitions. Initial franchise fees and resales commissions contributed £0.16m of revenue.

Five new franchised offices were opened in the first half, increasing the number of offices worldwide to 306 across four networks. The number of managed properties increased significantly from 37,000 to around 54,000.

Net cash inflow from operations was £1.2m compared to £0.7m in the previous year.

Sales and letting markets have been shaken up by the changes in tax regime and stamp duty for buy to let landlords as well as by the uncertainty in the lead up to the EU referendum. Despite this underlying demand for property however remains strong according to the board.

“Looking to the future I see continuing opportunities for Belvoir to consolidate the property market by assisting franchise owners to grow their networks by making local acquisitions and for the Group itself to continue to lead the overall property franchise market,” said chief executive Mike Goddard.

Earnings per share was 2.6p and adjusted earnings per share was 3.3p, compared to 2.5p for both last year.

Earnings were adjusted for exceptional acquisition costs of £193,000. The interim dividend was consistent with the previous year at 3.4p.

Share price was down 2.94% at 132p on Monday at 08:08 BST.