Belvoir Group PLC, the UK’s largest property franchise, has issued a trading update ahead of publishing its interim results on 7 September 2020.
The Board is delighted to report that trading during the first half of 2020 has delivered continued growth due to the success of its strategy, despite the UK-wide lockdown.
Both revenue and operating profit is comfortably ahead of 2019 with net profit in line with management’s pre-Covid expectations, as set at the start of the year.
Following a strong first quarter, trading in Q2 was subdued between 25 March and 13 May when the Group’s offices were closed and operating entirely under lockdown regulations.
Since the restrictions on the housing sector were lifted in mid-May, there has been a surge of activity due to pent-up demand.
This has seen Group network revenue in June up 12% compared with June 2019 with our lettings business up 17% and ahead of pre-Covid levels, and has resulted in June being a record-breaking month for our Newton Fallowell estate agency network in terms of instructions and sales, and for our financial services division in terms of written income.
Management Service Fees, our key recurring revenue stream, from our 308 (2019: 300) high street lettings and estate agency offices was 1% lower than H1 2019, whilst overall income from the property division was up 9% partly due to the increased revenue from the acquired Lovelle network.
Meanwhile, our financial services commission was up 7% in H1 as a result of the enlarged adviser network and the focus on re-mortgages and insurance products seen during the lockdown.
The Group has continued to generate cash from operations with net debt at 30 June 2020 standing at £5.7m (31 December 2019: £6.9m) having deployed £2.0m of cash in January to acquire the Lovelle network and deferred payment of £0.5m VAT until Q1 2021.
At the time of the 2019 final results, the Board decided that, given the unprecedented uncertainty, it would be prudent not to propose a final dividend for 2019.
The Board believes that the Group’s balance sheet provides adequate liquidity to reinstate its progressive dividend policy.
Further details will be provided with the interim results in early September based on the Board’s assessment of the prevailing circumstances at that time.
Whilst there is still some uncertainty as to how the housing market will be affected during the remainder of the year, the Board is confident of meeting its pre-Covid expectations for the year ending 31 December 2020.
Dorian Gonsalves, CEO, commented:
“This strong Group performance once again demonstrates the incredible resilience of the franchise business model in the face of both changes within the sector and challenges affecting the wider economy.
“The Group has benefitted from the considerable momentum built up during 2019 and the start of 2020, during which time the property division had fully mitigated the impact of the June 2019 tenant fee ban through a combination of assisted acquisitions and income diversification, investing in the Lovelle network and growing our financial services division’s network of advisers by 35%.
“With a return to pre-Covid levels of activity or better since housing sector restrictions were lifted, and the positive impact of the stamp duty reductions still to take effect, we are confident that the Group is well positioned to capitalise on the current market upturn and to take advantage of the opportunities arising from more challenging economic conditions.”