BLV.L Regulatory News (BLV)

BELVOIR LETTINGS PLC

(the "Company" or "Belvoir")

Full Year Results for Belvoir's operating business

Belvoir Lettings PLC (AIM: BLV), one of the UK's largest lettings franchises which recently listed on AIM, is pleased to announce full year results for the financial year ended 31 December 2011 of its principal operating subsidiary and its former holding company.

As part of Belvoir's IPO process, the Belvoir group underwent a reconstruction whereby Belvoir, a newly incorporated entity, became the new group holding company with effect from 16 February 2012. This statement contains extracts from the audited financial statements of Belvoir Property Management (UK) Limited ("BPML"), the sole Belvoir group operating subsidiary, for the period to 31 December 2011. In addition, the unaudited management accounts of Kilima Holdings Limited ("Kilima") are included as an appendix. Kilima was the relevant holding company for BPML prior to reorganisation ahead of the Company's IPO. As part of the IPO group reconstruction process, Kilima underwent a solvent liquidation and has therefore ceased trading.

Highlights

·; Successful IPO on AIM on 19 February 2012 raising £6.3m net of expenses

·; As part of the flotation, the Belvoir group underwent a reconstruction whereby Belvoir, a newly incorporated entity, became the new group holding company with effect from 16 February 2012

·; These results comprise the unaudited results of Kilima, the former group holding company, and extracts from the audited results of BPML, the sole Belvoir group operating subsidiary, in each case for the period to 31 December 2011

·; All 2011 performance targets were either met or exceeded

·; 142 franchise outlets at 31 December 2011 (2010: 136)

·; Revenue of £3.35m (2010: £3.26m)

·; Excluding an exceptional charge relating to the costs of the Belvoir group's Admission to AIM and a £63k share based payment charge, BPML's operating profit as a percentage of turnover increased by 7% to 55% driven by an increase in MSF income and strong cost control by management

·; Cash generated from operations in Kilima before flotation costs was £1.99m (2010: £1.63m)

·; Appointment of a new senior manager to strengthen and accelerate franchise recruitment

·; Rental market continued to grow with an estimated 3 million private rented properties in England, representing 14% of all households

·; Some 60% of private rental properties are believed to be owned by landlords who use lettings agents. Management expect this percentage to grow further

Current Trading and Outlook

Following Belvoir's successful IPO in February we have been pleased with our progress and we are in line with achieving our objectives for the year, supported by favourable market conditions. The rental market has continued to grow and we are encouraged by the opportunities that are available. In particular the buy to let market continues to gather pace and tenant demand remains strong.

In line with our stated strategy of growing the business further, we are due to expand from our 142 offices that are currently in operation by opening another three in the near future in Chelsea, Leeds South and Evesham and our pipeline has further opportunities ongoing.

Also to expand our network further, since the IPO 3 of our franchisees have acquired competing agencies in St Helens, Wellingborough and Tunbridge Wells.

We look to forward to updating shareholders as we continue to develop the Belvoir brand.

Commenting on the results, Dorian Gonsalves, Managing Director, said:

"Belvoir lettings delivered a strong financial performance last year. During the period we grew the franchise business from 136 to 142 franchise outlets. Belvoir's debut on the AIM market of the London Stock Exchange in February this year will allow us to continue to expand the brand's national reach and strong market presence in the UK residential lettings market as we remain committed to providing a professional and personal service designed to exceed the expectations of landlords and tenants."

For further details:

The following statement contains extracts from the audited financial statements of Belvoir Property Management (UK) Limited ("BPML"), the sole Belvoir group operating subsidiary, for the period to 31 December 2011.  In addition, the unaudited management accounts of Kilima Holdings Limited ("Kilima") are included as an appendix.  Kilima was the relevant holding company for BPML prior to reorganisation ahead of Belvoir's IPO.  As part of the IPO group reconstruction process, Kilima underwent a solvent liquidation and has therefore ceased trading.  

BELVOIR PROPERTY MANAGEMENT (UK) LIMITED

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 DECEMBER 2011

The directors present their report with the financial statements of the company for the year ended 31 December 2011.

BUSINESS REVIEW

2011 was a solid year for BPML, where all of the performance targets set in the previous year were met or exceeded. With the company's focus on the UK residential lettings market the company benefited from the steady growth in the numbers of properties being introduced to the market. It was recently estimated by industry experts that there are nearly three million private rented properties in England which represents 14% of all households. This is up by 40% from the same statistic 10 years ago and the Directors believe the percentage of households will grow to 20% over the next five years. It is further estimated by industry experts that approximately 60% of private rented properties are owned by landlords who use lettings agents and the Directors believe this will grow as the market becomes more government regulated. Although market conditions were buoyant for the 142 franchise lettings agents who make up the Belvoir network, competition was also intense. The total number of lettings agents in the UK increased to over 10,000 in 2011 largely as a result of estate agents turning to lettings to supplement low incomes from house sales. There were also an increased number of private lettings agents. Belvoir added six new franchisees to their network during the year.

The network of Belvoir lettings agents has steadily increased from the formation of the company 16 years ago in Grantham with the longest standing franchisees having been with the company from the outset. Some of the franchisees are recently started and overall this portfolio of agents succeeded in increasing their combined income by 9.24 %. In turn the management service fee (MSF) of BPML, which represents 12% of these sales rose by 9.24%.

The company's only owned outlet in Grantham had a relatively stable year with turnover decreasing by 5.35%. It has not been the absolute priority of management to grow the Grantham shop, since it is more important that it is used as a showcase for the company's systems, procedures and shop fit styles as part of the training for new franchisees. The Grantham shop does not enjoy the same catchment area as the franchise areas and therefore demonstrates that the Belvoir model can work well even when the available area is small.

During the year BPML strengthened the franchise recruitment department through the appointment of a new senior manager and in the senior management team a new Finance Director was taken on to ensure that the company floated successfully and raised further funds for expansion. Work on this commenced in August 2011 and the Company was successfully admitted to trading on AIM market in February of 2012. A significant reorganisation of the group was necessary in order to attract the tax incentivised investment that proved to be available. Pursuant to this reconstruction Belvoir Lettings PLC, a newly incorporated entity, became the new group holding company with effect from 16 February 2012.

STATEMENT OF FINANCIAL POSITION

31 DECEMBER 2011

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2011

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2011

BELVOIR PROPERTY MANAGEMENT (UK) LIMITED

NOTES TO THE STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2011

1. RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS

2. CASH AND CASH EQUIVALENTS

The amounts disclosed on the statements of cash flow in respect of cash and cash equivalents are in respect of these statements of financial position amounts:

NOTES TO THE FINANCIAL STATEMENTS - continued

FOR THE YEAR ENDED 31 DECEMBER 2011

1. ACCOUNTING POLICIES

Basis of preparation

The financial information has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards adopted by the European Union ("IFRSs") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. These are the company's first financial statements prepared in accordance with IFRSs. The following principal accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements.

The company has elected to use a previous revaluation of the freehold property before the date of transition as the deemed cost at the date of transition. The buildings element of this cost is subsequently depreciated from this date. The net book value of the property as at the date of transition was £375,892.

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

The directors anticipate that the adoption of those standards and interpretations which, at the date of authorisation of these financial statements, were in issue but not yet effective will have little or no impact on the financial statements when they come into effect.

Revenue recognition

Revenue represents income from the sale of franchise licences, provision of training and ongoing support of the franchisees. Recharged income is recognised when costs are incurred. Service fees are invoiced to individual franchisees on a monthly basis in relation to a percentage of their turnover for any given month.

Revenue also includes fees generated by franchises operated within the company. These internal franchises invoice landlords on a monthly basis and so recognise the income during the period in which the work is carried out.

Initial franchise fees are recognised upon signing of the contract as it is at this point that the new franchisee has a legal obligation to make good the terms of the contract. The initial fees are for the use of the brand along with initial training and support and promotion during the opening phase of the new office. As such the company regard this as a separate initial transaction for which they have fulfilled their obligations.

National Promotional Fund recharge is invoiced to franchise owners on a monthly basis and is calculated based on a percentage of the turnover of individual franchises. The fund is held internally (as agent for the franchise) for the purposes of promoting the brand to the benefit of all franchises. An element of the National Promotional Fund is recognised as income each month in respect of management fees for promoting the brand. No other element of receipt is recognised as revenue.

Taxes

Current tax is the tax currently payable based on the taxable profit for the year.Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amount of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Tax losses available to be carried forward as well as other income tax credits to the company are assessed for recognition as deferred tax assets.Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of comprehensive income, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

Share-based employee remuneration

The group operates an equity-settled share-based remuneration plan for its senior management. The fair value of awards to employees that take the form of shares or rights to shares in the parent company is recognised as an expense within this company, as the employer, with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted.

2. Revenue

As the chief operating decision maker reviews financial information for and makes decisions about the group's overall franchising business, the directors have identified a single operating segment, that of property lettings franchising. Management do not report on a geographical basis and no customers represent greater than 10% of total revenue in any of the periods reported. The directors believe there to be three material income streams which are split as follows:

3. FLOTATION COSTS

The costs represent the professional fees and associated costs incurred to 31 December 2011 in relation to the proposed listing of the group on the Alternative Investment Market following the year end.

4. EMPLOYEES AND DIRECTORS

5. FINANCE INCOME

6. PROFIT BEFORE TAX

7. TAXATION

The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The difference is explained below: