Belvoir Lettings beats forecasts as new franchise strategy begins

Full year results from Belvoir Lettings beat expectations after a "pivotal" and transformational year in which it moved to a new multi-brand franchising strategy.

During the year the company completed acquisition of the Newton Fallowell and Goodchilds franchised networks to add the new brands for its strategy.

For the calendar year, group revenue rose 19% to £6.9m as management service fees swelled 25% to £4.0m and property sales jumped 60% to £1.4m.

Profit before tax of £2.2m was up 25% over the prior year, with earnings per share increasing 16% to 6.5p.

The solid earnings and increased year-end cash position of £2.7m left the board confident of keeping the total dividend steady at 6.8p.

Chief executive Mike Goddard said the acquisitions substantially increased presence across the East and West Midlands respectively.

As a result of these new networks and organic expansion into seven new Belvoir territories, he pointed to group coverage increasing 31% to 212 outlets, with resulting boosts to management service fees and profits.

"I am confident that the coming year will see the full impact of our successful multi-brand strategy as the new brands become further incorporated into the Group.

"Looking to the future I expect Belvoir to be at the forefront of further consolidation within the property franchising industry as the benefits of centralised franchising expertise and economies of scale become more attractive."

The company said early signs for 2016 were positive, with a strong pipeline of potential franchise owners and an increased pipeline of potential acquisitions.

Belvoir's franchisees were said to be beginning to reap the benefits of utilising property sales to not only increase their turnover but, more importantly, as a tool to fuel the underlying growth of their managed lettings portfolios, which in turn translates into MSF growth for the franchisor.

"With demand for rental properties increasing, a nationwide drive to increase housebuilding and a renewed interest in franchising, the key drivers behind our successful business model remain unchanged."

House broker Cantor Fitzgerald said it felt Belvoir had become "significantly undervalued for a leading stock in its sector", forecasting £3.3m PBT and 8.4p EPS for 2016.