BLV.L Regulatory News (BLV)

4 April 2022

BELVOIR GROUP PLC

(the "Company", the "Group" or "Belvoir")

Final Results for the year ended 31 December 2021

25 YEARS OF UNBROKEN PROFIT GROWTH

Belvoir Group PLC (AIM: BLV), a leading UK property franchise and financial services group, is pleased to announce its audited Final Results for the year ended 31 December 2021, another year of strong growth, marking 25 years of unbroken profit growth.

Financial highlights

• Group revenue increased by 37% to £29.6m (2020: £21.7m), a record level, with 12% attributable to acquired businesses and 25% to like-for-like growth

• Management service fees ('MSF'), the key underlying return from franchisees, grew by 18% to £10.7m (2020: £9.1m)

• 39% increase in profit before tax to £9.3m (2020: £6.7m), marking 25 years of consecutive profit growth

• Continued strong lettings bias reflected in gross profit ratio of 56% lettings: 19% sales: 20% financial services: 5% other (2020: 60%:17%:19%:4%)

• Year-end cash of £7.4m (2020: £5.9m)

• Net debt significantly reduced by 65% to £1.3m (2020: £3.7m) despite deploying £4.4m on two corporate acquisitions

• Total dividend per share for the year up 18% to 8.5p (2020: 7.2p)

Operational highlights

• Achieved growth across all three markets: lettings, sales and financial services

• Acquired Nicholas Humphreys, a national network of 20 offices specialising in student lettings, in March 2021

• Acquired the mortgage advisory arm of The Nottingham Building Society (NBS) in July 2021, and dual-branded a further 26 NBS branches

• Expanded Belvoir's mortgage adviser network by 20% to 243 advisers (2020: 202)

• Greater reach with number of offices up 11% to 463 (2020: 418)

• Managed portfolio up 12% to 72,900 (2020: 65,065) properties

• Number of written mortgages up 37% to 16,585 (2020: 12,094)

• Number of house sales up 54% to 12,320 (2020: 8,003)

Post period end highlights

· Acquisition of a personal agent network, Mr and Mrs Clarke Limited, for £0.2m net cash on 11 March 2022 opening up a new home-based agency option for franchisees joining the Group

Dorian Gonsalves, Chief Executive Officer, commented:

"2021 was the busiest year for our sector in recent times with residential property sales transactions at their highest level since 2007, which boosted both our growing estate agency and financial services businesses. We worked closely with our property franchisees and financial services advisers to ensure that they were best placed to respond to the strong market conditions, which drove significant organic growth of 25%. 

"In addition to benefitting from the strong market conditions, we took the opportunity to make two strategic acquisitions. Adding the national Nicholas Humphreys franchise network to the Group has enabled us to extend our professional lettings service to encompass the specialist student lettings market. We also further strengthened our strategic alliance with the Nottingham Building Society, through the acquisition of its mortgage advisory arm, giving us access to its online savers who we hope will be our future mortgage clients.

"Since the year end, the Group has added a home-based agency network to its stable of property franchise brands, demonstrating the Board's ongoing commitment to identifying suitable acquisition targets to support Belvoir's continued growth.

"Given our significant recurring and reliable lettings revenue stream and our substantial financial services client base to draw upon during what is currently a strong market for remortgages, we remain confident that we will continue to perform well relative to the market as a whole, and that our business model and growth strategy will continue to deliver enhanced value for all our stakeholders."

Retail investor presentation

Dorian Gonsalves, CEO, and Louise George, CFO, will present live to retail investors reporting on the Group's final results via the Investor Meet Company platform today at 4.30pm. Investors can sign up for free and register to participate via: https://www.investormeetcompany.com/belvoir-group-plc/register-investor

For further details:

Notes for editors:

About Belvoir Group PLC

Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a nationwide property franchise Group with 463 offices across six brands specialising in residential lettings, property management, residential sales and property-related financial services. With its Central Office in Grantham, Lincolnshire, the Group manages 72,900 properties and reported record revenues of £29.6m in 2021 marking Belvoir's 25th year of unbroken profit growth.

For further information, please visit: www.belvoirgroup.com

Chairman's statement

Overview of performance

I am delighted to report that in 2021 the Belvoir Group continued its record of uninterrupted profit growth, now running to 25 years, which is a remarkable achievement. The Group benefited from the strongest residential sales market since 2007, boosting the performance of both our estate agency and financial services businesses. Meanwhile, after a number of years of very low rental growth, the excess demand for properties within the residential lettings market gave rise to substantial increases in rent for new tenancies.

All three of Belvoir's main income streams performed exceptionally well, resulting in a 37% increase in Group revenues to £29.6m (2020: £21.7m). In addition to achieving strong growth in the underlying business, the Group expanded both its property and financial services networks during the year through the strategic acquisitions of Nicholas Humphreys and Nottingham Mortgage Services.

Profit before tax increased to £9.3m (2020: £6.7m), up £2.6m. The Group now supports 363 franchised estate and lettings agencies operating through physical high street shops and 100 financial services businesses, comprising 243 (2020: 202) individual advisers.

Board and senior management

The Senior Management Team remained focused on the principal aim of supporting our franchise and mortgage adviser networks to maximise the opportunities for all stakeholders available from a strong housing market. At the same time the Board continued to pursue its growth strategy by identifying suitable acquisition targets that would enlarge our existing footprint or expand our service offering. The longevity, experience and commitment of Belvoir's Board and Senior Management Team undoubtedly underpin the continued success of the Group

At the start of 2022, we announced three Board changes. Mark Newton retired from his executive role to become a Non-Executive Director, continuing to add value through his considerable expertise in estate agency. At the same time Michelle Brook joined the Board as Financial Services Director, underlining the increasing importance of the financial services division to the Group's growth strategy. The Board was strengthened further through the appointment of an additional independent Non-Executive Director, Jon Di-Stefano, who brings a wealth of knowledge of the property sector, including areas very complementary to Belvoir's existing business, and of strategic business growth.

Governance

The Board promotes a culture of good governance and recognises how important our people are to the success of the Group. We continue to apply the 2018 Quoted Companies Alliance Corporate Governance Code (the "QCA Code") as the basis of the Group's governance framework.

Sustainability and ESG

With sustainability and other environmental, social and governance (ESG) issues becoming of increasing importance to the Belvoir Group and its stakeholders, we undertook a detailed ESG materiality assessment in 2021 as part of a full strategic review, and, based on its findings, developed a new ESG strategy for the Group. As a result of this, we aim to set a net zero target and are working towards understanding our impacts in order to put a suitable timeline in place to achieve this goal.

Covid-19

The Group continued to operate effectively under the various Covid-19 restrictions during 2021, with the property sector remaining open throughout the year. During the third national lockdown in the first half of 2021, the Group was able to quickly revert to the practices adopted in 2020 as necessary to ensure that all our office and central support team staff operated safely and within Government guidelines.

Dividends

As a result of another outstanding year, the Board is pleased to announce an 18% increase in our total dividend up to 8.5p (2020: 7.2p) per share. There will be a final dividend for 2021 of 4.5p per share payable on 30 May 2022.

Outlook

Even before the invasion of the Ukraine, the property market entered 2022 amid greater economic uncertainty and inflationary pressures. The devastation wreaked by the war on the Ukrainian people is shocking and our thoughts are with those who have been affected; we hope for a peaceful resolution to the crisis. It is too early to predict the full economic impact of the war, but it has already resulted in further inflationary pressure on energy bills that will affect the UK economy. As has been demonstrated during other turbulent periods in recent years, the Group has a proven resilient business model and a successful growth strategy that enable it to outperform market conditions. I am confident that a combination of our dedicated staff and the entrepreneurial spirit of our franchisees and advisers will continue to support the further development of the Group to the benefit of all stakeholders.

Finally, I would like to thank our exceptional Executive Team, staff, franchisees and advisers for their hard work in making 2021 another successful year for the Group. Despite the challenges presented by Covid-19 during the year, our people remained committed to delivering the very best service to all our customers throughout the Group.

Michael Stoop

Non-Executive Chairman

Chief Executive Officer's statement

Overview of performance

Group revenue increased by 37% to £29.6m (2020: £21.7m), a record level. 2021 was one of the busiest years in recent times for estate agents, with UK residential property sales transactions up 41% on 2020 and 22% ahead of the six-year average to 2019. The Group worked closely with its franchisees and mortgage adviser networks to ensure that they were best placed to take advantage of the strong market conditions, which gave rise to organic growth of 25% in the underlying business. The Group added a further 12% to revenue from the expansion of both its property and financial services networks through two strategic acquisitions.

The financial services division achieved revenue growth of 49% to £14.4m (2020: £9.7m), 44% of which arose from the underlying business. The acquisition of Nottingham Mortgage Services, the mortgage advisory arm of the Nottingham Building Society ("The Nottingham"), increased revenue by 5%. Our network of advisers has grown by 41 advisers to 243 (2020: 202), 17 of whom are dedicated to servicing The Nottingham's members. Financial services clearly benefited from the buoyancy in the residential property sales market throughout most of 2021, and towards the end of the year was sustained by a busy period for remortgages and associated insurance products.

Revenue from the property division was up 27% to £15.2m (2020: £12.0m) with like-for-like growth at 16%. The acquisition of Nicholas Humphreys, a national specialist student lettings franchise network, accounted for 18% of growth in the property division from its 17 franchised and three corporate-owned offices. Meanwhile, the planned franchising of five of the Lovelle corporate-owned offices, in line with our franchising strategy, reduced revenue by 7%. 

Management service fees (MSF), the key underlying return from franchisees, were up 18% for the year to £10.7m (2020: £9.1m) and revenue from corporate-owned offices was up 61% to £3.6m (2020: £2.3m). The exceptionally strong residential property sales market in 2021 temporarily shifted the lettings to sales ratio from its more traditional 80:20 split to 74:26.

Revenue from property sales, both MSF and corporate, increased by 49% to £3.7m (2020: £2.5m) with the extension of the stamp duty holiday ensuring that the residential sales market remained highly active until September, and thereafter returned to more normal transaction levels with unfulfilled demand continuing to fuel house price inflation. Like-for-like sales growth was 46%.

Lettings revenue increased by 21% to £10.7m (2020: £8.8m), benefiting from the acquisition of the predominantly student lettings-focused Nicholas Humphreys network. The underlying lettings increase of 7% reflected a strong lettings market in which the demand for more space and a return of young people to UK cities as offices reopened post lockdown resulted in an insufficient supply of available properties to rent. As a result, rents on new tenancies were seen to rise by around 8%.

All three markets continued to grow throughout 2021 with revenue from lettings up 21%, sales up 49% and financial services up 49%, combining to deliver an excellent year for the Group. Belvoir now has a portfolio of 72,900 (2020: 65,065) managed properties, and in 2021 Group house sales were up 54% to 12,320 (2020: 8,003) and the number of mortgages arranged by Belvoir's advisers was up 37% to 16,585 (2020: 12,094). The Group's network revenue, being the total revenue across all our Group companies, our franchisees and our advisers, totalled £112m (2020: £96m).

Our strategic priorities

The majority of our mortgage business is currently being introduced from non-Group sources, i.e. national contracts serviced in partnership with MAB and independent estate agency businesses, and leads generated by our online marketing activities or from our extensive client database. A key focus for 2022 is to drive further collaboration between our property and our financial services networks, so that we can maximise the earnings potential for our franchisees and advisers from offering financial services through all Group offices. 

Our two corporate acquisitions in 2021 are further evidence of our successful growth strategy of investing in similar businesses that expand the footprint of both our franchise and financial services networks, and where there is scope for greater future growth as part of the Belvoir Group. The acquisition of Nicholas Humphreys in March 2021 opened up the specialist student lettings market for the Group, and provides a platform for extending the network into other university towns. Having partnered with the Nottingham Building Society in 2020 to undertake all estate agency and lettings services through its branch network, Belvoir strengthened this strategic alliance further through the acquisition of Nottingham Mortgage Services in July 2021. In addition to providing mortgage advice to The Nottingham's branch members, this partnership provides access to its lifetime ISA members who will be saving for their first home through the Beehive Money app, a new digital savings platform launched at the end of 2021. With the Government adding 25% to savings up to a maximum of £1,000 per year, this will be a popular savings product for many first-time buyers.

Creating value

The Group is highly cash generative and the Board aims to deploy its cash reserves by acquiring businesses that meet its strategic investment criteria, as demonstrated by its investment in corporate acquisitions every year since 2015, including a further corporate transaction completed post year end.

The Group's continued success in acquiring and assimilating additional franchise and financial services businesses, alongside organic growth in our networks, has helped to deliver an increase of over 138% in profit before tax to £9.3m (2017: £3.9m) and 137% in EPS to 20.4p (2017: 8.6p) over the last four years.

Our marketplace

The property sector had its busiest year for transactions since 2007, with almost 1.5 million properties passing onto new homeowners in 2021, compared with a yearly average of 1.2 million since 2010. The requirement to work from home during the pandemic and the subsequent hybrid home and office arrangements for many have caused many homeowners and tenants to reassess their lifestyle and housing needs. With many seeking larger suburban homes with gardens, there has been 'a race for space' which has impacted both the sales and the lettings market. At the same time the stamp duty holiday stimulated demand further enabling those with properties of a higher value to move with little or no stamp duty payment. The market returned to more traditional transaction levels towards the end of 2021 and the challenge at the start of 2022 is a lack of stock in both the lettings and sales markets. This is anticipated to ease as we move into spring, which is traditionally the most active time of the year for homeowners starting to look to move.

The financial services sector anticipates increased remortgage activity by both home-owners and buy-to-let (BTL) landlords whose mortgages, fixed amid robust property markets in 2017 and at the start of 2020, are coming to an end of their two and five-year deals. With further stimulus stemming from predicted interest rate rises in 2022, transfers and remortgages are forecast to increase. As a result, our financial services division will benefit from having a substantial client bank to service, and this will mitigate some of the fall in the house purchase mortgage activity.

Outlook

Our significant recurring and reliable lettings revenue stream, our substantial financial services client base and the diversity and resilience of our business model are expected to insulate the Group from what could be a more uncertain market in 2022, especially given economic pressures and geo-political turmoil.

We remain confident that we will continue to perform well relative to the market as a whole, and that our business model and growth strategy will continue to deliver enhanced value for all our stakeholders.

Dorian Gonsalves

Chief Executive Officer

Financial review

Revenue

Group revenue in 2021 increased by £7.9m to £29.6m (2020: £21.7m). Corporate acquisitions and disposals during the year added net £1.8m, whilst revenue on a like-for-like basis increased by £6.1m.

Revenue from our financial services division was up £4.7m to £14.4m (2020: £9.7m) resulting from growth generated both organically and by acquisition. On 29 July 2021 the Group acquired Nottingham Mortgage Services Limited, renamed Brook Mortgage Services Limited (BMS), which added 17 advisers and £0.5m of revenue in the last five months of 2021. Revenue growth of £4.2m from the underlying financial services business was generated from an additional 24 advisers and a strong mortgage market.

Revenue from the property division was up £3.2m to £15.2m (2020: £12.0m). The acquisition of White Kite Group 2021 Limited, which trades as Nicholas Humphreys through 17 franchised and three corporate-owned offices, added £2.1m to revenue. Meanwhile, the planned franchising of five Lovelle corporate-owned offices between August 2020 and January 2021 reduced revenue by £0.8m. On a like-for-like basis, the property division achieved growth of £1.9m. 

Income streams in the property division comprise: management services fees (MSF), these being our key underlying revenue stream from franchisees; revenue generated by corporate-owned offices; franchise sales, which include fees charged to franchisees joining the Group and renewal fees from existing franchisees; and other fees.

MSF increased by £1.6m to £10.7m (2020: £9.1m) with £0.3m arising from the 17 Nicholas Humphreys franchise offices and the five newly franchised Lovelle offices. Lettings MSF were up £0.7m, of which £0.4m arose from the underlying network. MSF from property sales were up £0.9m to £2.5m (2020: £1.6m), which arose predominantly from the pre-existing business.

Income from corporate-owned offices was up £1.4m. The three Nicholas Humphreys corporate-owned offices added revenue of £1.9m. Meanwhile, the franchising of five Lovelle corporate-owned offices reduced revenue from corporate-owned offices by £0.9m, against which there was a compensatory impact from an increase of £0.1m in MSF and a £0.8m reduction in overheads. The Group continues to operate two corporate-owned offices in Grantham, which contributed additional revenue of £0.4m in 2021, up 18% on 2020. With the exception of these two offices, the Group will generally look to identify a franchise solution in line with its franchise business model at an appropriate time.

Revenue from franchise sales in 2021 was £0.3m (2020: £0.2m). Five (2020: seven) new offices opened in 2021, all of which resulted from an existing franchise owner opening an additional office. A further 16 (2020: three) existing franchise offices were resold, seven of which were to a new franchise owner joining the Group and nine to an existing franchise owner taking on an additional territory. 

Other income was unchanged at £0.4m (2020: £0.4m).

Gross profit

Gross profit increased by 29% to £19.0m (2020: £14.8m) with the gross profit ratio by business activity being lettings 56%, sales 19%, financial services 20% and other 5% (2020: 60%:17%:19%:4%), reflecting the significant bias towards our recurring lettings income stream.

The lower gross profit margin from financial services of 27% (2020: 29%) resulted in the Group gross margin of 64% (2020: 68%). These shifts reflect the greater proportion of independent Business Partners operating within the financial services network, some of whom join together in 'hubs', and who earn a higher rate. This operating model does not require a comparable increase in overheads, and as such has contributed to the improvement in the Group operating profit margin to 32% (2020: 31%). 

Administrative expenses

Administrative expenses increased by £1.5m to £9.7m (2020: £8.2m). This comprised:

Operating profit

Operating profit was up £2.7m to £9.3m (2020: £6.6m), an increase of 41% over the prior year.

Other income

In May 2020, options over 40,000 shares in Mortgage Advice Bureau, an AIM-listed company, vested. These were sold during 2020 and a gain of £0.1m was recognised in other income within the prior year.

Profit before taxation

Profit before taxation of £9.3m (2020: £6.7m) is after interest receivable on franchisee loans of £0.2m (2020: £0.2m), which is regarded by the Group as part of its ongoing operations to extend the network reach.

Taxation

The effective rate of corporation tax for the year was 20.6% (2020: 20.3%). The March 2021 Budget commitment to increase corporation tax to 25% with effect from April 2023 was substantially enacted in May 2021. As a result, deferred tax balances expected to reverse after April 2023 have been remeasured at 25% and £0.5m is reflected in the 2021 tax charge. This was mitigated by a credit of £0.5m arising from the difference between the deferred tax asset release and the corporation tax deduction on share options exercised during the year. The difference reflected a stronger share price at the time of exercise compared to the price at the end of 2020, on which the deferred tax asset was based.

Earnings per share

Basic earnings per share was up 35% to 20.4p (2020: 15.1p) based on an average number of shares in issue in the year of 36,142,000 (2020: 35,101,000). When the dilutive effect of share options is incorporated, the earnings per share was 20.3p (2020: 14.6p).

Profit attributable to owners was £7.4m (2020: £5.3m).

Dividends

The Board is proposing a final dividend for 2021 of 4.5p per share (2020: 5.1p, which included a catch-up of 1.3p on the final 2019 dividend). Subject to shareholders' approval at the AGM on 26 May 2022, this dividend will be paid on 30 May 2022, based upon the register on 19 April 2022. The ex-dividend date is 14 April 2022.

In total, the 2021 dividend for the year will be 8.5p (2020: 10.5p including the catch-up on the final 2019 dividend of 3.3p) with dividend cover at 2.3x. The Board aims to offer a reliable and growing income stream to investors whilst retaining sufficient funds for further investment to meet its strategic growth objectives.

Cash flow

The Group continues to achieve a high conversion of cash from operations activities with 100% (2020: 110%) of EBITDA converting into cash of £10.3m (2020: £8.2m). The net cash inflow from operations was £8.5m (2020: £6.8m) reflecting the enlarged Group.

The net cash used in investing activities was £3.5m (2020: £1.4m):

• On 15 January 2021 the sale of the Lovelle Grimsby Lettings corporate office held for resale generated proceeds of £0.6m.

• On 31 March 2021 the Company acquired the entire share capital of White Kite Holdings 2021 Limited for £4.0m cash consideration, net of cash acquired.

• On 29 July 2021 Brook Financial Services Ltd acquired the entire share capital of Nottingham Mortgage Services Limited for £0.4m cash consideration, net of cash acquired.

• The cash outflow of franchisee loans granted was £0.8m (2020: £0.7m) with the level of assisted acquisitions activity remaining low compared to the period pre-pandemic.

• The cash inflow from repayments to the franchise loan book was £1.0m (2020: £0.8m) with a Covid-19-related capital repayment holiday reducing cash inflow in 2020 by £0.4m.

• Interest received on the franchise loan book was £0.2m (2020: £0.2m).

During 2021 £0.9m (2020: £0.9m) was repaid against the HSBC loan and associated finance costs were £0.2m (2020: £0.3m). Dividend payments totalled £3.3m (2020: £1.9m), of which £0.5m was a catch-up of the suspended final 2019 dividend payment. As a result, net cash outflow from financing activities totalled £3.6m (2020: £3.1m).

Liquidity and capital resources

At the year end the Group had cash balances of £7.4m (2020: £5.9m) and a term loan of £8.7m (2020: £9.6m). The HSBC facility is repayable at £0.9m per year in half yearly repayments until March 2023 followed by a final repayment of £7.9m. Bank covenants are set at dividend cover of greater than 4.0 and the debt service ratio at greater than 1.2, within which the business is forecast to operate with substantial headroom. 

Unearned indemnity commission

Associated with our growing financial services division is the accounting treatment of unearned indemnity commission. This comprises three elements, the net effect of which is £0.7m (2020: £0.5m):

• The Group accounts for amounts withheld by Mortgage Advice Bureau from weekly commission payments in respect of unearned indemnity commission within other debtors. At the year end this balance was £1.6m (2020: £1.3m).

• Revenue is reduced to reflect the estimated clawback of commission by Mortgage Advice Bureau arising on the cancellation of life assurance policies within four years following inception and a refund liability is recognised for unearned indemnity commission. At the year end the refund liability was £1.5m (2020: £1.3m).

• Also, on a weekly basis the estimated clawback of commission recoverable from our advisers is accounted for within other debtors. At the year end this balance was £0.6m (2020: £0.5m).

Post-year-end acquisition

On 10 March 2022 the Group acquired Mr and Mrs Clarke Limited, a personal agent network offering estate agency services nationwide. Consideration comprised an initial payment of £23,000 satisfied in cash from existing cash reserves, and a three-year earnout at 6x EBITDA. A further £177,000 was applied to the settlement of certain liabilities at completion. In the year to 31 August 2021 Mr and Mrs Clarke Limited recorded revenue of £600,000 and operating profit of £13,000 and at that date had net assets of approximately £61,000.

Financial position

The Group continues to operate from a sound financial platform with net assets of £33.6m (2020: £28.3m), with the main change being the additional intangible assets arising from the acquisitions of White Kite Holdings 2021 Limited and Nottingham Mortgage Services Limited, which were funded from existing cash reserves. 

Louise George

Chief Financial Officer

Group statement of comprehensive income

For the financial year ended 31 December 2021

The accompanying notes form an integral part of these condensed consolidated financial statements.

Statement of financial position

As at 31 December 2021

The accompanying notes form an integral part of these condensed consolidated financial statements.

Statement of changes in equity

For the financial year ended 31 December 2021

Group

The accompanying notes form an integral part of these condensed consolidated financial statements.

Statement of cash flows

For the financial year ended 31 December 2021

The accompanying notes form an integral part of these condensed consolidated financial statements.

Notes to the condensed consolidated financial statements

For the financial year ended 31 December 2021

1 Approval

This announcement was approved by the Board of Directors on 1 April 2022.

2 Accounting policies

General information

Belvoir Group PLC is the ultimate parent company of the Group, whose principal activity during the year under review was that of selling, supporting and training residential property franchises. The Group also operates a network of advisers who, through our franchise property networks, provide advice to our residential property clients.

Belvoir Group PLC, a public company limited by shares listed on AIM, is incorporated and domiciled in the United Kingdom.

Registered office

The address of the registered office and principal place of business of Belvoir Group PLC is The Old Courthouse, 60A London Road, Grantham, Lincolnshire NG31 6HR.

Basis of preparation

Whilst the financial information included in this annual financial results announcement has been prepared in accordance with the recognition and measurement principles of UK-adopted International Accounting Standards and with those parts of the Companies Act 2006 applicable to companies reporting under International Financial Reporting Standards (IFRS), this announcement does not contain sufficient information to comply therewith.

The financial information set out herein does not constitute the Company's statutory accounts for the years ended 31 December 2021 or 2020 but is derived from those accounts. Statutory accounts for the year ended 31 December 2020 have been delivered to the Registrar of Companies and those for the year ended 31 December 2021 will be delivered following the Company's annual general meeting.

The auditors have reported on those accounts; their reports were unqualified and did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports. Their reports for the year end 31 December 2021 and 31 December 2020 did not contain statements under s498 (2) or (3) of the Companies Act 2006.

Going concern and Covid-19

The Group continues to operate from a sound financial platform and is strongly cash generative. The bank balance as at the date of this report is £8.3m. Whilst the Group continues to generate profit and cash, demonstrating excellent resilience despite the ongoing impact of the pandemic, the Board has nonetheless revisited its forecasts against a range of possible downside outcomes for the period to 31 December 2023. These include the possible impact on the economy of post-pandemic easing of restrictions; higher energy prices; increased tax and interest rates; and political uncertainty both home and abroad on trading.

Sensitivities have been applied to the base case model to reflect minimal impact on lettings income and moderately lower levels of income from sales and mortgage activity but no reduction in headcount or other overheads and no change in terms of business with franchisees.

Under all reasonably foreseeable circumstances, the Board has concluded that the Group has adequate resources to continue in operational existence and to meet its financial obligations as they fall due, whilst operating within its bank covenants, in the period to 28 March 2023.

The final bank loan repayment of £7,868,000 is due on 28 March 2023. The base case forecasts indicate the cash to repay the loan will be available and other mitigating actions remain available to ensure cash is maximised in any reasonably foreseeable downside scenarios. However, the Group's growth ambitions, both organically and though acquisition, will require additional facilities if growth is not to be constrained. Negotiations to secure a new facility are expected to commence during 2022 and initial indications from the Group's bankers suggest that they are supportive, both in relation to extending the existing facilities or providing a new, larger facility.

In conclusion, the Board are satisfied that it remains appropriate to prepare these financial statements on a going concern basis and that no material uncertainties exist.

Standards adopted for the first time

One amendment to accounting standards impacting the Group that has been adopted in the annual financial statements for the year ended 31 December 2021 is the Interest Rate Benchmark Reform - IBOR "Phase 2" (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).

This amendment is mandatorily effective for reporting periods beginning on or after 1 January 2021. The amendments provide relief to the Group in respect of certain loans whose contractual terms are affected by interest rate benchmark reform.

Standards, amendments and interpretations to existing standards that are not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early.

The following amendments are effective for the period beginning 1 January 2022:

• Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);

• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

• Annual Improvements to IFRS Standards 2018 - 2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and

• References to the Conceptual Framework (Amendments to IFRS 3).

The following amendments are effective for the period beginning 1 January 2023:

• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

• Definition of Accounting Estimates (Amendments to IAS 8); and

• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that "settlement" includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The amendments were originally effective for annual reporting periods beginning on or after 1 January 2022. However, in May 2020, the effective date was deferred to annual reporting periods beginning on or after 1 January 2023.

In response to feedback and enquiries from stakeholders, in December 2020, the IFRS Interpretations Committee (IFRIC) issued a tentative agenda decision, analysing the applicability of the amendments to three scenarios. However, given the comments received and concerns raised on some aspects of the amendments, in April 2021, IFRIC decided not to finalise the agenda decision and referred the matter to the IASB. In its June 2021 meeting, the IASB tentatively decided to amend the requirements of IAS 1 with respect to the classification of liabilities subject to conditions and disclosure of information about such conditions and to defer the effective date of the 2020 amendment by at least one year.

The Group is currently assessing the impact of these new accounting standards and amendments. The Group will assess the impact of the final amendments to IAS 1 on classification of its liabilities once they are issued by the IASB. The Group does not believe that the amendments to IAS 1, in their present form, will have a significant impact on the classification of its liabilities, as the conversion feature in its convertible debt instruments is classified as an equity instrument, and therefore, does not affect the classification of its convertible debt as a non-current liability.

3 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 business. In the year ended 31 December 2021 the Board identified two operating segments, that of franchisor of property agents and property-related financial services.

The Directors consider gross profit as the key performance measure. The reported segments are consistent with the Group's internal reporting for performance measurement and resource 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 property franchise income streams, which are management service fees, revenue from corporate-owned offices and fees on the sale or resale of franchise territory fees; and one material financial services income stream, which is commission receivable on financial services. These revenue streams are split as follows:

Revenue from corporate-owned offices of £3,631,000 (2020: £2,250,000) includes £14,000 (2020: £933,000) relating to one Lovelle corporate-owned office (2020: five Lovelle corporate-owned offices and the Northwood Glossop portfolio) that was held as an asset for sale pending being franchised out. This comprises £14,000 (2020: £578,000) of lettings revenue and £nil (2020: £355,000) of sales revenue.

Gross profit for the two divisions is split as follows:

Profit for the financial year

The parent company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own statement of comprehensive income in these financial statements. The profit on ordinary activities after taxation of the Company for the year was £7,418,000 (2020: £5,904,000).

4 Share-based payments

Administrative expenses include a charge of £223,000 (2020: £444,000) 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.

5 Dividends

Group

The Directors propose a final dividend of 4.5p per share totalling £1,678,000 for 2021, payable 30 May 2022, to shareholders on the register on 19 April 2021. As this remains conditional on shareholders' approval, provision has not been made in these financial statements.

6 Earnings per share

Group

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. Options over ordinary shares and rights of conversion are described in note 27. The calculation of diluted earnings per share is derived from earnings per share, adjusted to allow for the issue of shares under these instruments.

7 Reconciliation of profit before taxation to cash generated from operations

Group

8 Acquisitions

Belvoir Group PLC acquired White Kite Holdings 2021 Limited on 31 March 2021, for cash consideration of £4,078,000. White Kite trades as Nicholas Humphreys, a network of 17 franchised estate agencies and three corporate-owned estate and lettings agencies.

Brook Financial Services Ltd acquired Nottingham Mortgages Services Limited, the mortgage business operated by the Nottingham Building Society ("The Nottingham" or "NBS") for cash consideration of £730,000. Renamed Brook Mortgage Services on completion, the mortgage business acquired operated a team of 27 advisers and administrators servicing The Nottingham's branch members.

For both acquisitions, the goodwill represents the value attributable to the new businesses and the assembled and trained workforce.

Deferred tax at 25% has been provided on the value of the separable intangible assets. In respect of White Kite, initial deferred tax liability has been recognised on the customer relationships, brand and master franchise agreement acquired which is reduced subsequently in line with the amortisation period. Whilst the initial book value of goodwill is higher than the tax base, no deferred liability is recognised on goodwill.

In October 2021 Belvoir Property (UK) Limited took back four London franchises which are now being managed by our Central Office in Grantham until a new franchise owner is appointed. 

The above transactions met the definition of a business combination and have been accounted for using the acquisition method under IFRS 3. The assets and liabilities below are shown at their provisional fair values as at acquisition.

Post-acquisition financial results

If the acquisitions had completed on the first day of the financial year, Group revenues would have been £31.1m and Group profit before tax would have been £9.6m.

9 Post-balance sheet events

Acquisition of Mr and Mrs Clarke

On 10 March 2022, Belvoir Group PLC acquired the entire share capital of Mr and Mrs Clarke Limited, which operates a national network of ten partners and associates operating a personal estate agency model. This transaction meets the definition of a business combination and will be accounted for using the acquisition method under IFRS 3.

The initial consideration of £0.023m was settled in cash from existing reserves post year end, and comprised substantially intangible assets and goodwill. A further £0.177m of cash was applied to the settlement of certain liabilities at completion.

At the time that the financial statements have been authorised for issue, the initial accounting for this business combination is incomplete. As such the full disclosure of this business combination cannot be made at this time.

10 Posting of accounts

It is intended that the financial statements for the year ended 31 December 2021 will be made available to shareholders on the company's website www.belvoirgroup.com by 7 April 2022 and will also be available thereafter at the registered office, The Old Courthouse, 60a London Road, Grantham, NG31 6HR.

11 Annual General Meeting

The Annual General Meeting will be held at 10am on 26 May 2022 at the registered office, The Old Courthouse, 60a London Road, Grantham, NG31 6HR.