17:00 Mon 04 Apr 2016
Belvoir Lettings PLC - Preliminary Results
For Immediate Release
BELVOIR!
(the "Company", the "Group" or "Belvoir")
Preliminary Results for the year ended
Financial highlights
· Group revenue up 19% to
· Growth in Management Service Fees (MSF) was 25% to
· Revenue from property sales up 60% to
· The Group remains predominantly lettings-based with a ratio of lettings to sales revenue of 77:23 (2014: 84:16)
· Administrative expenses of
· Operating profit at
· Profit before taxation was
· Strong year-end cash position of
· Basic earnings per share of 6.5p (2014: 5.6p); adjusted of 7.3p (2014: 5.6p)
· Final dividend of 3.4p (2014: 3.4p) giving a total dividend for the year of 6.8p (2014: 6.8p)
Operational highlights
· Belvoir is now a multi-brand Group following the acquisition of the Newton Fallowell and Goodchilds franchised networks
· UK coverage increased by 50 outlets (31%) to 212 (2014: 162) with the addition of new networks
· Recruitment restored in H2 following the General Election uncertainty in H1, resulting in eleven (2014: 15) new Belvoir franchisees for the year, seven into new and four into existing territories
· Record growth performance by two franchised offices whose turnover each exceeded
· Property sales being offered by 111 (2014: 30) outlets
· Networks account for around 37,000 (2014: 30,000) managed properties
· Secured "Gold Lettings Franchise of the Year Award" for the fifth time in six years
2016 update
· Newton Fallowell exceed their 2017 EBITDA target of
· Given their performance to date, the earn out due to the Newton Fallowell vendors in 2017 of
· Board strengthened with appointment of Mark Newton
· Current trading in line with management expectations
Mike Goddard, Chief Executive Officer of Belvoir Lettings, commenting on the results, said:
"2015 was a pivotal year for Belvoir. The Company commenced its strategic vision of a multi-brand operation with the acquisitions of Newton Fallowell and Goodchilds, substantially increasing our presence across the East and West Midlands respectively. As a result of these new networks and seven new Belvoir territories, our UK coverage has increased by 31% to 212 outlets, MSF is up 25% to
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."
For further details:
Mike Goddard, Chairman and CEO Louise George, Chief Financial Officer
|
01476 584900 |
Cantor Fitzgerald Europe Rick Thompson, Phil Davies, Michael Reynolds |
020 7894 7000
|
|
|
Buchanan Charles Ryland, Victoria Watkins, Madeleine Seacombe |
0207 466 5000 |
|
|
The preliminary results will be available on the Company's website: www.belvoirlettingsplc.com
About
Founded in 1995, Belvoir is one of the UK's largest specialist lettings agency franchises, with 212 outlets nationwide.
Since listing on AIM in
Belvoir's core revenue is derived from Management Service Fees (MSF); a reliable recurring revenue model which allows the Group to offer franchisees significant support and advice.
In 2015, Belvoir launched its multi-brand franchising strategy; acquiring
Belvoir continues to grow organically by delivering award winning service, prioritising franchisee recruitment and supporting franchisee acquisitions. In recognition, the Group was awarded the "Best Lettings Agency Franchise Award" at the 2015
The Company remains committed to diversifying its brand portfolio, utilising Belvoir's strong franchising expertise and infrastructure, in order to capitalise on a rapidly increasing target market.
Chairman's statement
Introduction
2015 was a pivotal year for Belvoir. The Company commenced its strategic vision of a multi-brand operation, so as to further expand the network reach across the UK, whilst continuing to support and develop the strong organic growth of our existing Belvoir network. The Board appreciated the support of our shareholders in funding the mid-year acquisitions and 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.
Multi-brand franchising strategy
The Company purchased the Newton Fallowell network of 31 outlets in July and the Goodchilds network of 14 outlets in October. As a result of these two major acquisitions a number of key indicators have risen significantly compared to last year. Profits before tax have increased by 25% to
Growth strategy
The Group's estate agency business which was introduced in 2014, continues to accelerate, with 111 (2014: 30) franchise owners trained to offer a property sales service by the end of 2015. Growth has been achieved due to both organic growth within the pre-existing Belvoir network and the acquisitions of the Newton Fallowell and Goodchilds networks already offering this service. We expect this number to increase by a further 41 offices in 2016. Revenue from property sales grew by 60% to
Growth at individual franchisee level is an important strategic focus and we are continuing to invest in a comprehensive marketing strategy, consisting of both traditional measures and through social media, as well as providing acquisition opportunities for our franchise owners. Our strategy has proved successful, with revenue growth for the Belvoir network continuing to accelerate in 2015 exceeding 12% growth during the period.
The team
Following his recent appointment, I am delighted to welcome Mark Newton to the Board. As Managing Director of Newton Fallowell, Mark will be taking Board level responsibility for management of both the Newton Fallowell and Goodchilds networks. Mark has a deep understanding of estate agency and franchising, which will both strengthen and complement the expertise of the Belvoir Board in delivering on its multi brand strategy and value creation for shareholders.
The Board greatly appreciates the considerable efforts made by our staff to meet the challenges of the past year, so I would like to take this opportunity to personally thank everyone for their continued commitment to the Company.
The future
Looking to the future I anticipate further consolidation within the property franchising industry as the benefits of centralised franchising expertise and economies of scale become more attractive. I expect the
Michael Goddard
Chairman and Chief Executive
Operating review
MSF growth
MSF for the Group increased by 25% to
Lettings
Lettings represents over three quarters of our MSF and corporate revenue reflecting that Belvoir continues to operate predominantly as a lettings franchise model with lettings activity providing a predictable and stable core income. With the additional burden of regulation across the private rented sector more landlords are utilising the services of a letting agent and this is reflected in our underlying growth in MSF. Rents continue to rise, broadly in line with growth in wages, and according to the
Property sales
Following the introduction of estate agency in 2014, primarily to offer a full property service to our landlord clients, and the acquisition of the Newton Fallowell and Goodchilds networks in 2015, over half of our franchise owners are now able to offer a property sales service. Typically, over 90% of the landlords who wish to sell their property are being converted to a sales instruction for the franchise office. This also provides an opportunity to introduce a new landlord buyer rather than lose the ongoing management of a rented property. With over 37,000 (2014: 30,000) properties currently under management, and new relationships with local and national housebuilders, property sales remains a significant area of future growth.
Acquisitions
Our strategy of providing financial support to our franchisees who want to accelerate growth through acquisition resulted in the successful completion on franchisee-led acquisitions in Bury, Brighton, Southampton and Aldershot. There are over 10,000 potential acquisition targets comprising small to medium-sized independent lettings and sales agencies in the UK and in late 2015 we invested in an in-house acquisition sourcing service with two full-time members of staff. This investment resulted in a stronger pipeline of acquisitions in progress at the end of 2015.
Corporate outlets
During the year we operated from company-owned outlets in Pimlico, Lichfield, Burton upon Trent, Cumbria, Basingstoke, Tadley, Grantham and Devizes, the latter two having been bought back during the year due to exceptional personal circumstances of the respective franchisees. It is the Company's strategic objective to re-franchise these outlets when the opportunity arises so as to bring them in line with our core franchising expertise.
Compliance
Belvoir has consistently been recognised for its high standards of service and professionalism. Much of this can be attributed our rigorous training programme, ongoing support of our network and most importantly our compliance procedures. Every office is audited annually by our audit and compliance team to ensure that our operational standards and current legislation are being strictly adhered to. This will become increasingly important as greater regulation and control is introduced into the private rented sector.
A growing business
In 2015 our network increased in size by almost a third to a total of 212 (2014: 162) outlets. Eleven new franchisees were recruited to the Belvoir network, seven of which opened in new territories, and the acquisitions of Newton Fallowell and Goodchilds extended our national reach by 44 franchised outlets and one corporate outlet.
Our growth depends directly on the entrepreneurial drive of our franchisees and unlike many franchise offerings, our model offers our franchisees both a revenue stream as they operate and grow their business and a capital value on exit. Two outlets achieved record performance in the year generating more than
Our successful strategy of growing our network organically with single office operators, multi-unit operators and by acquisition continues.
Market conditions
In recent years there has been a rapid growth in the residential lettings market and the outlook is set to continue. In 2014/15, among the total housing stock in the UK, there were 14.3 million owner occupiers, 4.3 million (19%) privately rented, and 3.9 million (17%) rented in the social housing sector. Of the four million households in the private rented sector, around 50% of private landlords use the services of a letting agent. Over 37,000 residential properties across the UK are managed by our three brands; this represents less than 1% of a rapidly increasing target market. The percentage of landlords who use a letting agent to provide specialist advice and expertise is set to increase, as is the number of dwellings within the private rented sector.
An increased supply of properties for homeownership, and within the rented sector, is needed to satisfy current housing needs in the UK. The Government has reacted to this demand by announcing a number of new initiatives in 2015. These include doubling the current housing budget to
Franchising in the UK
According to the most recent survey carried out by the
Current trading and outlook
Early signs for 2016 are positive, with a strong pipeline of potential franchise owners and an increased pipeline of potential acquisitions. Franchisees are now 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.
Dorian Gonsalves
Managing Director Belvoir
Financial review
Revenue
Group revenue for the financial year ended
Initial franchise fees and resales commissions were down 17% after a challenging first half for franchise recruitment caused by the uncertainty surrounding the General Election. In total these contributed revenue of
Corporate owned outlets contributed
The Directors have decided to restate the 2014 statement of comprehensive income by
The two network acquisitions during the year introduced a greater proportion of revenue from estate agency into the Group with MSF from property sales contributing
Operating profit before exceptional items
Operating profit before exceptional costs was
Non-exceptional administrative expenses for the year were down 2% to
Within administrative expenses there is a charge of
Exceptional items
The exceptional costs of
Finance income
Interest receivable on franchisee loans of
Profit before taxation
Profit before taxation was
Taxation
The effective rate of corporate tax for the year was 22.9% (2014: 24.4%) due to the exceptional costs of the acquisitions not being an allowable deduction from profits for tax purposes.
Earnings per share
Basic earnings per share was 6.5p (2014: 5.6p) based on an average number of shares in issue in the period of 26,197,089 (2014: 24,010,417), an increase of 2,186,672 arising from the share issue in July and
Dividends
The Board is proposing a final dividend for 2015 of 3.4p per share (2014: 3.4p). Together with the interim dividend of 3.4p paid to shareholders on
Subject to shareholders' approval at the AGM on
Cash flow
The net cash inflow from operations was
The net cash used in investing activities was
· On
· On
· The Group bought back two franchised outlets at a cost of
· During the year the net inflow from the franchise loan book was
Two significant share issues net of share placing costs accounted for
Liquidity and capital resources
At the year end the Group had cash balances of
Financial position
The Group continues to operate from a sound financial platform and is strongly cash generative. This, together with the
Key performance indicators
The Group uses a number of key financial and non-financial performance indicators to measure performance.
The key financial indicators are as follows:
· management service fees;
· operating profit; and
· earnings per share.
The key non-financial indicators are as follows:
· number of outlets;
· recruitment of new franchise owners;
· compliance of franchised outlets;
· level of Belvoir-assisted franchisee acquisitions;
· take-up of property sales;
· no. of managed properties with the group; and
· lettings awards.
Louise George
Chief Financial Officer
Group statement of comprehensive income
For the financial year ended 31 December 2015
|
|
Notes |
2015 £'000 |
Restated 2014 £'000 |
Continuing operations |
|
|
|
|
Revenue |
|
|
6,947 |
5,856 |
Administrative expenses |
|
|
|
|
Non exceptional |
|
|
(4,799) |
(4,887) |
Exceptional - acquisition costs |
|
7 |
(201) |
- |
|
|
|
(5,000) |
(4,887) |
Operating profit |
|
|
1,947 |
969 |
Profit on disposal of corporate outlets |
|
3 |
- |
651 |
Finance costs |
|
|
(61) |
(111) |
Finance income |
|
|
338 |
269 |
Profit before taxation |
|
|
2,224 |
1,778 |
Taxation |
|
|
(510) |
(434) |
Profit and total comprehensive income for the financial year |
|
|
1,714 |
1,344 |
Profit for the year attributable to the equity holders of the parent company |
|
|
1,714 |
1,344 |
|
|
|
|
|
Basic earnings per share from continuing operations |
|
9 |
6.5p |
5.6p |
Adjusted basic earnings per share from continuing operations |
|
9 |
7.3p |
5.6p |
Diluted earnings per share from continuing operations |
|
9 |
6.4p |
5.6p |
The Group's results shown above are derived entirely from continuing operations.
Statements of financial position
As at 31 December 2015
|
|
|
Group |
|
Company |
||
|
|
Notes |
2015 £'000 |
2014 £'000 |
|
2015 £'000 |
2014 £'000 |
|
Assets |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
Intangible assets |
|
11,854 |
1,477 |
|
- |
- |
|
Investments in subsidiaries |
|
- |
- |
|
22,039 |
12,483 |
|
Property, plant and equipment |
|
649 |
648 |
|
- |
- |
|
Trade and other receivables |
|
3,656 |
4,288 |
|
- |
- |
|
|
|
16,159 |
6,413 |
|
22,039 |
12,483 |
|
Current assets |
|
|
|
|
|
|
|
Trade and other receivables |
|
2,090 |
1,638 |
|
8,990 |
7,297 |
|
Cash and cash equivalents |
|
2,679 |
1,486 |
|
130 |
1,029 |
|
|
|
4,769 |
3,124 |
|
9,120 |
8,326 |
|
Total assets |
|
20,928 |
9,537 |
|
31,159 |
20,809 |
|
Liabilities |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Interest-bearing loans and borrowings |
10 |
500 |
1,500 |
|
- |
- |
|
Deferred tax |
|
1,001 |
141 |
|
- |
- |
|
|
|
1,501 |
1,641 |
|
- |
- |
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
|
4,149 |
725 |
|
3,329 |
37 |
|
Interest-bearing loans and borrowings |
10 |
500 |
21 |
|
- |
- |
|
Tax payable |
|
357 |
156 |
|
- |
- |
|
|
|
5,006 |
902 |
|
3,329 |
37 |
|
Total liabilities |
|
6,507 |
2,543 |
|
3,329 |
37 |
|
Total net assets |
|
14,421 |
6,994 |
|
27,830 |
20,772 |
|
Equity |
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
|
Share capital |
11 |
305 |
240 |
|
305 |
240 |
|
Share premium |
|
7,379 |
- |
|
7,379 |
- |
|
Share-based payments reserve |
|
51 |
33 |
|
51 |
33 |
|
Revaluation reserve |
|
162 |
162 |
|
(50) |
(50) |
|
Merger reserve |
|
(5,774) |
(5,774) |
|
8,101 |
8,101 |
|
Retained earnings |
|
12,298 |
12,333 |
|
12,044 |
12,448 |
|
Total equity |
|
14,421 |
6,994 |
|
27,830 |
20,772 |
The financial statements were approved and authorised for issue by the Board on 1 April 2016 and signed on its behalf by:
Michael Goddard
Executive Chairman and Chief Executive Officer
Registered Number 07848163
Statements of changes in shareholders' equity
For the financial year ended 31 December 2015
Group
|
Share capital £'000 |
Share premium £'000 |
Share-based payments reserve £'000 |
Revaluation reserve £'000 |
Merger reserve £'000 |
Retained earnings £'000 |
Total equity £'000 |
Balance at 1 January 2014 |
240 |
11,742 |
- |
162 |
(5,774) |
880 |
7,250 |
Changes in equity |
|
|
|
|
|
|
|
Cancellation of share premium |
- |
(11,742) |
- |
- |
- |
11,742 |
- |
Share-based payments |
- |
- |
33 |
- |
- |
- |
33 |
Dividends |
- |
- |
- |
- |
- |
(1,633) |
(1,633) |
Transactions with owners |
- |
(11,742) |
33 |
- |
- |
10,109 |
(1,600) |
Profit and total comprehensive income for the financial year |
- |
- |
- |
- |
- |
1,344 |
1,344 |
Balance at 31 December 2014 |
240 |
- |
33 |
162 |
(5,774) |
12,333 |
6,994 |
Issue of equity share capital |
65 |
7,379 |
- |
- |
- |
- |
7,444 |
Share-based payments |
- |
- |
18 |
- |
- |
- |
18 |
Dividends |
- |
- |
- |
- |
- |
(1,749) |
(1,749) |
Transactions with owners |
65 |
7,379 |
18 |
- |
- |
(1,749) |
5,713 |
Profit and total comprehensive income for the financial year |
- |
- |
- |
- |
- |
1,714 |
1,714 |
Balance at 31 December 2015 |
305 |
7,379 |
51 |
162 |
(5,774) |
12,298 |
14,421 |
Company
|
Share capital £'000 |
Share premium £'000 |
Share-based payments reserve £'000 |
Revaluation reserve £'000 |
Merger reserve £'000 |
Retained earnings £'000 |
Total equity £'000 |
Balance at 1 January 2014 |
240 |
11,742 |
- |
(50) |
8,101 |
860 |
20,893 |
Changes in equity |
|
|
|
|
|
|
|
Cancellation of share premium |
- |
(11,742) |
- |
- |
- |
11,742 |
- |
Share-based payments |
- |
- |
33 |
- |
- |
- |
33 |
Dividends |
- |
- |
- |
- |
- |
(1,633) |
(1,633) |
Transactions with owners |
- |
(11,742) |
33 |
- |
- |
10,109 |
(1,600) |
Profit and total comprehensive income for the financial year |
- |
- |
- |
- |
- |
1,479 |
1,479 |
Balance at 31 December 2014 |
240 |
- |
33 |
(50) |
8,101 |
12,448 |
20,772 |
Issue of equity share capital |
65 |
7,379 |
- |
- |
- |
- |
7,444 |
Share-based payments |
- |
- |
18 |
- |
- |
- |
18 |
Dividends |
- |
- |
- |
- |
- |
(1,749) |
(1,749) |
Transactions with owners |
65 |
7,379 |
18 |
- |
- |
(1,749) |
5,713 |
Profit and total comprehensive income for the financial year |
- |
- |
- |
- |
- |
1,345 |
1,345 |
Balance at 31 December 2015 |
305 |
7,379 |
51 |
(50) |
8,101 |
12,044 |
27,830 |
Statements of cash flows
For the financial year ended 31 December 2015
|
|
|
Group |
|
Company |
||
|
|
Notes |
2015 £'000 |
2014 £'000 |
|
2015 £'000 |
2014 £'000 |
|
Operating activities |
|
|
|
|
|
|
|
Cash generated from/(used in) operating activities |
12 |
2,364 |
50 |
|
(1,901) |
(3,245) |
|
Tax paid |
|
(572) |
(454) |
|
- |
- |
|
Net cash flows generated from/(used in) operating activities |
|
1,792 |
(404) |
|
(1,901) |
(3,245) |
|
Investing activities |
|
|
|
|
|
|
|
Dividends received |
|
- |
- |
|
1,700 |
1,800 |
|
Acquisitions |
|
(6,892) |
- |
|
(6,395) |
- |
|
Working capital and cash introduced by companies acquired |
|
241 |
- |
|
- |
- |
|
Capital expenditure on property, plant and equipment |
|
(102) |
(92) |
|
- |
- |
|
Disposal of assets |
|
14 |
- |
|
- |
- |
|
Capital expenditure on intangibles |
|
- |
(20) |
|
- |
- |
|
Disposal of corporate outlets |
|
- |
1,798 |
|
- |
- |
|
Deferred consideration |
|
- |
(206) |
|
- |
- |
|
Franchisee loans granted |
|
(449) |
(3,110) |
|
- |
- |
|
Loans repaid by franchisees |
|
1,138 |
738 |
|
- |
- |
|
Finance income |
|
338 |
269 |
|
2 |
12 |
|
Net cash flows (used in)/generated from investing activities |
|
(5,712) |
(623) |
|
(4,693) |
1,812 |
|
Financing activities |
|
|
|
|
|
|
|
Finance costs |
|
(61) |
(111) |
|
- |
- |
|
Loan repayments in the year |
|
(521) |
(790) |
|
- |
- |
|
Proceeds from share issue |
|
7,890 |
- |
|
7,890 |
- |
|
Share placing costs |
|
(446) |
- |
|
(446) |
- |
|
Equity dividends paid |
|
(1,749) |
(1,633) |
|
(1,749) |
(1,633) |
|
Net cash generated from/(used in) financing activities |
|
5,113 |
(2,534) |
|
5,695 |
(1,633) |
|
Net change in cash and cash equivalents |
|
1,193 |
(3,561) |
|
(899) |
(3,066) |
|
Cash and cash equivalents at the beginning of the financial year |
|
1,486 |
5,047 |
|
1,029 |
4,095 |
|
Cash and cash equivalents at the end of the financial year |
|
2,679 |
1,486 |
|
130 |
1,029 |
|
|
|
|
|
|
|
|
Notes to the preliminary statement
1 Approval
This announcement was approved by the Board of Directors on 1 April 2016.
2 Basis of preparation
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 2014, but is derived from those accounts. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Sections 498(2) or (3) of the Companies Act 2006.
For the year ended 31 December 2015 the Group has prepared its annual report and accounts in accordance with accounting standards adopted for use in the European Union (International Financial Reporting Standards).
3 Change of prior year presentation
The Directors have decided to restate the 2014 statement of comprehensive income by £0.7m to account for the sale of two corporate outlets in 2014 as a profit on disposal rather than revenue, as this better represents the underlying trading of the Group. Whilst this reduces the operating profit by £0.7m in the prior year, it has no impact on the profit before taxation for that year.
4 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 year ended 31 December 2015 the Board identified a single operating segment, that of property lettings, estate agency and franchising.
The segmental information is, therefore, the same as that set out in the consolidated statement of comprehensive income. The Directors do not consider the presentation of gross profit within the Group statement of comprehensive income to reflect a true position of the Group's activities and core operations, which is that of a property letting and sales franchisor. Therefore, the Directors disclose operating profit as the key performance measure. The reported segment is 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 either of the periods reported. The Directors believe there to be three material income streams which are split as follows:
|
Lettings |
Property sales |
Total revenue |
|||
|
2015 £'000 |
2014 £'000 |
2015 £'000 |
2014 £'000 |
2015 £'000 |
2014 £'000 |
Management service fees |
3,669 |
3,222 |
375 |
16 |
4,044 |
3,238 |
Corporate owned outlets |
913 |
1,145 |
980 |
831 |
1,893 |
1,976 |
|
4,582 |
4,367 |
1,355 |
847 |
5,937 |
5,214 |
Initial franchise fees and resale commissions |
|
|
|
|
356 |
432 |
Other income |
|
|
|
|
654 |
210 |
|
|
|
|
|
6,947 |
5,856 |
5 Operating profit
Operating profit is stated after charging:
|
2015 £'000 |
2014 £'000 |
Depreciation - owned assets |
136 |
74 |
Amortisation of customer relationships and brand |
142 |
60 |
Impairment of goodwill |
119 |
90 |
Auditors' remuneration |
|
|
- Fees payable to the Company's auditors for the audit of Company's annual accounts |
46 |
13 |
- Tax compliance services |
19 |
14 |
- Statutory audit of subsidiaries |
15 |
25 |
Operating lease expenditure |
|
|
- Land and property |
303 |
148 |
- Other |
138 |
71 |
6 Share-based payments
Administrative expenses includes a charge of £18,000 (2014: £33,000) after valuation of the Company's employee share options schemes in accordance with IFRS 2 'Share-based payments'. Under this standard, the fair value of the options at the grant date is spread over the vesting period. These items have been added back in the statement of changes in equity.
7 Exceptional Items
Transaction costs associated with the acquisitions of Newton Fallowell Ltd and Goodchilds Estate Agents and Lettings Ltd of £201,000 were incurred during the year. This amount was paid during the year and was not allowable for tax purposes.
8 Dividends
|
2015 £'000 |
2014 £'000 |
Final dividend for 2014 |
|
|
3.4p per share paid 1 June 2015 (2013: 3.4p per share paid 24 April 2014) |
816 |
816 |
Interim dividends for 2015 |
|
|
3.4p per share paid 15 October 2015 (2014: 3.4p per share paid 15 October 2014) |
933 |
817 |
Total dividend paid |
1,749 |
1,633 |
The Directors propose a final dividend of 3.4p per share totalling £1,039,000 payable on 31 May 2016. As this remains conditional on shareholders' approval, provision has not been made in these financial statements.
9 Earnings per share
Basic earnings per share is calculated by dividing the profit for the financial year by the weighted average number of ordinary shares in issue during the year. The calculation of diluted earnings per share is derived from the basic earnings per share, adjusted to allow for the issue of shares under these instruments.
|
2015 |
2014 |
Profit for the financial year |
£1,714,000 |
£1,344,000 |
Adjusted profit for the financial year |
£1,955,000 |
£1,344,000 |
Weighted average number of ordinary shares - basic |
26,197,089 |
24,010,417 |
Weighted average number of ordinary shares - diluted |
26,914,453 |
24,084,623 |
Basic earnings per share |
6.5p |
5.6p |
Diluted earnings per share |
6.4p |
5.6p |
Adjusted basic earnings per share |
7.3p |
5.6p |
Adjusted diluted earnings per share |
7.1p |
5.6p |
10 Maturity of borrowings and net debt
31 December 2015 |
|
|
Term loan £'000 |
Group |
|
|
|
Repayable in less than six months |
|
|
273 |
Repayable in months seven to twelve months |
|
|
267 |
Current portion of long-term borrowings |
|
|
540 |
Repayable in years one to five |
|
|
517 |
Total borrowings |
|
|
1,057 |
Less: interest included |
|
|
(57) |
Total net debt |
|
|
1,000 |
31 December 2014 |
Mortgage loan £'000 |
Revolving credit £'000 |
Total £'000 |
Group |
|
|
|
Repayable in less than six months |
21 |
- |
21 |
Payable in seven to twelve months |
- |
- |
- |
Current portion of long-term borrowings |
21 |
- |
21 |
Repayable in years one to five |
- |
1,599 |
1,599 |
Total borrowings |
21 |
1,599 |
1,620 |
Less: interest included |
- |
(99) |
(99) |
Total net debt |
21 |
1,500 |
1,521 |
Bank loan is secured by a fixed and floating charge over the Group assets.
The mortgage loan was fully repaid during in May 2015.
The term loan balance of £1,000,000 is repayable in quarterly instalments to December 2017 and bears interest at 4.25% above base rate.
11 Called up share capital
|
2015 |
|
2014 |
||||||
|
Number |
£'000 |
|
Number |
£'000 |
||||
Group and Company |
|
|
|
|
|
||||
Allotted, issued and fully paid |
|
|
|
|
|
||||
Ordinary shares of 1p each |
30,546,763 |
305 |
|
24,010,417 |
240 |
||||
|
|
|
|
|
|
||||
|
|
Group Company Number |
Nominal share capital £
|
Share premium £
|
|||||
As at 1 January and 31 December 2014 |
|
24,010,417 |
240 |
33 |
|||||
Issue of shares during the year: |
|
|
|
|
|||||
28 July 2015 - share price 125p |
|
3,424,000 |
34 |
3,938 |
|||||
06 October 2015 - share price 116p |
|
1,667,346 |
17 |
1,917 |
|||||
07 October 2015 - share price 116p |
|
693,695 |
7 |
798 |
|||||
07 October 2015 - share price 116p |
|
40,000 |
- |
46 |
|||||
23 October 2015 - share price 116p |
|
711,305 |
7 |
818 |
|||||
As at 31 December 2015 |
|
30,546,763 |
65 |
7,517 |
|||||
12 Reconciliation of profit before taxation to cash generated from operations
Group
|
2015 £'000 |
2014 £'000 |
Profit before taxation |
2,224 |
1,778 |
Depreciation and amortisation charges (including impairment) |
397 |
224 |
Share-based payment charge |
18 |
33 |
Profit on disposal of corporate outlets |
- |
(651) |
Finance costs |
61 |
111 |
Finance income |
(338) |
(269) |
|
2,362 |
1,226 |
Decrease in trade and other receivables |
(278) |
151 |
Decrease in trade and other payables |
280 |
(1,327) |
Cash generated from operations |
2,364 |
50 |
13 Acquisitions
During the year the Company acquired two franchised networks as part of the Group's multi-brand franchising strategy with the aim of increasing the Group's presence in the franchised property sector and opening up additional growth opportunities, as follows:
On 29 July 2015 the Company acquired 100% of the equity of Newton Fallowell, a company comprising a network of 30 franchised and one corporate owned estate and lettings agents, for £3,954,000 in cash on completion and deferred consideration through an earn-out. The earn-out is based on a multiple of 6.667 times EBITDA capped at £804,000 in the year to 29 February 2016 and £984,000 in the year to 28 February 2017 resulting in a maximum earn-out of £2,330,000. See note 28 regarding post balance sheet events.
On 6 October 2015 the Company acquired 100% of the equity of Goodchilds Estate Agents and Lettings Ltd, a company comprising a network of 14 franchised estate and lettings agents, for £2,441,000 in cash on completion and deferred consideration of £814,000 payable in equal tranches at the six month and twelve month anniversary of completion.
Both transactions met the definition of a business combination and are accounted for using the acquisition method under IFRS 3. The assets and liabilities below are shown at their fair values at acquisition.
|
Belvoir |
Belvoir Grantham £'000 |
Newton Fallowell |
Goodchilds £'000 |
Total £'000 |
Intangible assets |
|
|
|
|
|
Trade names |
- |
- |
88 |
9 |
97 |
Master franchise agreements |
- |
- |
2,876 |
1,475 |
4,351 |
Customer relationships |
83 |
290 |
- |
- |
373 |
Tangible assets |
- |
- |
50 |
- |
50 |
Trade and other receivables |
- |
- |
577 |
66 |
643 |
Cash and cash equivalents |
- |
- |
(48) |
54 |
6 |
Deferred tax liabilities |
- |
(53) |
(539) |
(264) |
(856) |
Trade and other payables |
- |
- |
(355) |
(90) |
(445) |
Identifiable net assets acquired |
83 |
237 |
2,649 |
1,250 |
4,219 |
Goodwill on acquisition |
28 |
149 |
3,635 |
2,005 |
5,817 |
Consideration |
111 |
386 |
6,284 |
3,255 |
10,036 |
Consideration settled in cash |
111 |
386 |
3,954 |
2,441 |
6,892 |
Contingent consideration |
- |
- |
2,330 |
- |
2,330 |
Deferred consideration |
- |
- |
- |
814 |
814 |
Total consideration |
111 |
386 |
6,284 |
3,255 |
10,036 |
The goodwill represents the value attributable to the new businesses and the assembled and trained workforce. Deferred tax at 18% has been provided on the value of intangible assets defined as brand names and master franchise agreements. Acquisition costs of £201,000 were incurred and charged to exceptional items in the consolidated statement of comprehensive income.
|
Newton Fallowell £'000 |
Goodchilds £'000 |
Total £'000 |
Revenue |
952 |
114 |
1,066 |
Profit and loss |
519 |
92 |
611 |
If the acquisitions had completed on the first day of the financial year, Group revenues would have been £8.2m and Group profit before tax would have been £3.0m.
14 Post Balance Sheet Event
Subsequent to the year end it was agreed that the Newton Fallowell earn out based on the financial performance for the year to 28 February 2017 would be cancelled and that the cap on the earn out based on the financial performance for the year to 29 February 2016 would be increased to the maximum payable under the original sale and purchase agreement. The basis for the change stemmed from the fact that the Newton Fallowell group had already exceeded its target for both years under review and that, subsequent to the acquisition of the Goodchilds, management of this network was being undertaken by the Newton Fallowell management team.
15 Posting of accounts
It is intended that the financial statements for the year ended 31 December 2015 will be made available to shareholders on the company's website www.belvoirlettingsplc.com by 25 April 2016 and will also be available thereafter at the registered office, The Old Courthouse, 61a London Road, Grantham, NG31 6HR.
16 Annual General Meeting
The Annual General Meeting will be held at 10.00am on Thursday 26 May 2016 at the registered office, The Old Courthouse, 61a London Road, Grantham, NG31 6HR
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