What Belvoir does
The company also operates a financial services arm which provides its customers with mortgages and other property-related financial services products.
How it’s doing
Belvoir reported a jump in profits for the first half of its current year as its three business lines continued to outperform their respective markets.
For the six months to 30 June, the property franchise group generated a 23% rise in adjusted pre-tax profits to around £3mln, while revenues were up 48% at £9mln.
Financial services revenues tripled to £3.9mln, boosted by the acquisition of mortgage broker MAB (Gloucester) in November last year.
The core property franchise division lifted management service fees 5% to £4.2mln.
The firm’s interim dividend was maintained at 3.4p per share.
Executive interview – CEO Dorian Gonsalves
Looking ahead, chief executive Dorian Gonsalves said the group had made a “promising start” to its second half and was trading in line with management expectations for the full year.
“Trading across lettings, sales and financial services continue to outperform their respective markets and deliver strong results”, he added.
Gonsalves told Proactive in September that the growth in the group’s results showed that its franchisees were “not only surviving but thriving” despite fears of a downturn in the property market.
The CEO said that if the property sales market began to shrink, rental activity among its lettings agents was likely to increase due to a reduced number of buyers and higher numbers of “accidental landlords”, property owners that hold off and selling and decide to rent while waiting for prices to improve.
“We’re holding all the cards in terms of the rental stock”, Gonsalves said, with the company having around 64,500 properties under management.
What the broker says
In an August note initiating the firm with a target price of 190p, analysts at finnCap said while changes in the market, including the banning of tenants fees in June, were “squeezing” traditional and smaller players, Belvoir’s franchise model allowed it to harness entrepreneurial skills in the market without exposing it directly to the cost base or capital commitments of its franchisees.
“Belvoir’s growth strategy is underpinned by a highly professional network of franchisees with sound business ethics. This sounds like a bare minimum, but it is not necessarily true for the wider market, which is characterised by small, local agents. Tightening regulation is putting professional operators such as Belvoir at a competitive advantage”, said finnCap’s analysts.
The broker added that Belvoir’s financial services business presented a “major opportunity” to leverage its client base with a new service.
With the shares trading around 120p as of 5 September, Belvoir carries a market cap of £40.9mln.