BLV.L Regulatory News (BLV)

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7 September 2020

BELVOIR! BELVOIR GROUP PLC

(the "Company", "Group" or "Belvoir")

Interim results for the six months ended 30 June 2020

Growth continues

Belvoir Group PLC (AIM: BLV), the UK's largest property franchise, is pleased to announce Interim Results for the six months ended 30 June 2020.

Financial Highlights

· 8% increase in revenue to £9,774,000 (H1 2019: £9,047,000), of which 2% related to the underlying business and 6% to the acquired Lovelle network

· Management Service Fees (MSF) held up well at £4,157,000 (H1 2019: £4,201,000), only a 1% decrease

· 7% increase in Financial Services revenue to £4,253,000 (H1 2019: £3,969,000)

· 8% increase in gross profit to £6,720,000 (H1 2019: £6,198,000)

· 17% increase in profit before tax to £3,164,000 (H1 2019: £2,695,000) with 7% arising from the acquired Lovelle network and 10% from the underlying business

· 16% increase in basic earnings per share to 7.3p (2019: 6.3p)

· The impact of Covid-19 on the Group's expected revenue was substantially mitigated by a reduction in operating expenses and £250,000 of government Covid-19 support

· Overall H1 results are in line with management's pre Covid-19 expectations

Reinstatement of Dividend

· The Board has reinstated its progressive dividend policy with the payment of an interim dividend of 3.4p per share (H1 2019: 3.4p) with interim dividend cover at 2.1x (H1 2019: 2.0x)

· The Board also announces an additional 2.0p per share payable with the interim dividend as partial compensation for the suspension of the final 2019 dividend, with a view to a further catch-up payment at the time of the final 2020 dividend, dependent on prevailing circumstances at that time

Operational Highlights

· Completion in January on the acquisition of the 17-office Lovelle estate agency network

· Net increase of 38 financial services advisers bringing total to 174 (H1 2019: 136)

· Gross profit split of 62% lettings: 15% sales: 18% financial services: 5% other; relatively unchanged reflecting continued lettings bias

· Delivery of 35 training webinars, with over 1,650 attendees, to support our networks through the two month estate agency lockdown

· On 9 July 2020 the Group entered into a strategic alliance with The Nottingham Building Society ("The Nottingham") under which they transferred their estate and lettings agency activity to Belvoir.

Dorian Gonsalves, Chief Executive Officer of Belvoir Group, commenting on the results, said:

"I am delighted to report another half year of strategic and trading growth, having bought and integrated the Lovelle network and increased revenue and profitability from the underlying business. This is testament to the resilience of our franchise model during what has been a challenging time for our sector and the wider economy and a busy time for Belvoir.

"The reliable and recurring nature of our lettings business, which underpins 62% of gross profit, was evident during H1 with lettings operating on par with 2019. A strong Q1 for property sales and financial services was followed by a lockdown on estate agency activity for half of Q2 during which time our franchisees focused on looking after their pipeline so as to safeguard sales post-lockdown, and our financial advisers switched to selling remortgage and income and life protection products. Since our sector was 'unlocked' in May, both property sales and financial services activities have been at record-breaking levels for the Group in terms of instructions, sales agreed and written mortgages. These are expected to convert to sales fees and banked mortgage income during the remainder of the year.

"H2 started with further strategic progress through our alliance with The Nottingham Building Society. In addition to taking on their estate and lettings agency business, a number of our franchisees will also have the opportunity to offer The Nottingham members high quality estate agency services from co-branded building society branches.

"Given results are on track in H1, a promising start to H2, and a strong pipeline of agreed property sales and written mortgage business, the Board is confident of meeting management's pre-Covid expectations for the full year. As a reflection of the Board's confidence in the improving outlook, it was decided to reinstate our progressive dividend policy including a partial catch-up of the previously suspended final 2019 dividend."

Retail investor presentation

Dorian Gonsalves, CEO, and Louise George, CFO, are presenting live to retail investors reporting on the Group's interim results via the Investor Meet Company platform today at 4pm. Investors can sign up for free and register to participate via: https://www.investormeetcompany.com/belvoir-group-plc/register-investor

For further details:

Notes:

About Belvoir Group PLC

Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a nationwide property franchise group with 396 offices across five brands specialising in residential lettings, property management, residential sales and property-related financial services. With its Central Office in Grantham, Lincolnshire, the Group manages 69,000 properties and reported record revenues of £19.3m in 2019 making Belvoir the largest property franchise group in the UK. 

Chief Executive's Report

It gives me great pleasure to report on the Group's interim results for the six months ended 30 June 2020.

Covid-19 overview

2020 has been a rollercoaster year for the property sector. Against the back-drop of political uncertainty in 2019, the decisive general election in December unleashed a much-welcomed buoyancy in Q1 2020 until Covid-19 saw the UK locked down on 25 March.

At that time the Board took swift and decisive action to protect the health and well-being of our franchisees and financial advisers and their respective businesses, and of our staff across the Group. Of utmost importance was to ensure that our central teams could continue to provide the necessary support to enable our franchisees to in turn support their landlords, tenants, buyers and sellers, albeit all working safely from home under emergency government restrictions. During the two months in which our estate and lettings offices were closed, we remained in constant contact with our franchise owners, providing them with immediate interpretation of government guidelines affecting their business operations and our sector. We also delivered 35 free webinars with over 1,650 participants to train franchisees in how to operate safely and to maximise their revenue opportunities post-lockdown.

The Board also took the necessary steps to safeguard shareholder value by mitigating any shortfall in income through a thorough review of our cost base. During H1, overheads were reduced through a combination of tight cost control, a head count reduction to match foreseeable needs, the furloughing of 22% of our workforce, many of which were working in our corporate-owned estate agency offices and all of whom have now returned to work, an agreed senior staff salary reduction and negotiation of discounts from our suppliers. As a result, the H1 shortfall in expected revenue was matched by an equivalent amount from the reduction in overheads and government Covid-19 support.

With the estate agency sector being one of the first to be 'unlocked', our offices were able to re-open from 13 May, albeit operating on a 'new normal' basis taking the necessary precautions to ensure social distancing in line with government guidelines. Since re-opening, pent-up demand, fueled further in July by the temporary reduction in stamp duty, gave rise to a surge of activity that continued throughout the summer.

Overall performance

Despite the disruption of Covid-19 and also the loss of tenant fees in June 2019, the Group has reported H1 revenue up 8% to £9,774,000 (H1 2019: £9,047,000) and profit before tax up 17% to £3,164,000 (H1 2019: £2,695,000). The Group continued to achieve revenue growth across the three markets in which it operates with lettings up 8%, property sales up 14% and financial services up 7%. Growth in part can be attributed to our further strategic investment in franchising through the acquisition of the Lovelle network at the start of the year which added £181,000 to net profit before tax, and was more than matched by the underlying business contributing £288,000 of increased profitability.

Property division

The performance of our property division during the Covid-19 pandemic benefitted from the strong recurring nature of our lettings revenue with lettings MSF on par with H1 2019. Meanwhile, the Lovelle network added twelve franchised sales offices and mitigated the shortfall in sales MSF to 5%. Overall, MSF was only 1% lower than in H1 2019.

Corporate office revenue was temporarily boosted by the addition of six Lovelle corporate offices, each of which we intend to convert to a franchise during the remainder of 2020.

In the year to date, five new franchise owners have joined the Group with three having acquired an existing franchise office, one starting up through an assisted acquisition and one converting from an independent agency. Our network now comprises 308 (FY 2019: 313) offices having opened in four new territories. Meanwhile, four small offices closed in Q1 with their portfolios now managed either centrally or by a neighbouring franchisee, and five franchisees have merged their two offices to operate from a single office within their territory.

The Group now has a portfolio of 69,000 (H1 2019: 64,650) managed properties with eight franchise owners having completed on an assisted acquisition adding £1,473,000 p.a. of franchisee network revenue in the year to date. The lettings to sales revenue ratio from our estate and lettings offices remains unchanged at 80:20.

Financial services division

The Group continues to benefit from its investment in financial services with our adviser network up 28% to 174 (H1 2019: 136) and gross profit up 7% to £1,199,000 (H1 2019: £1,120,000). During the lockdown our advisers switched their focus to re-mortgages and life and income protection products which helped to mitigate the shortfall in sales of new mortgage products.

Business model

The robust response by our franchise owners and self-employed financial advisers to the Covid-19 pandemic has demonstrated once again the effectiveness of Belvoir's franchise business model and its suitability to the property sector. The entrepreneurial spirit of our franchisees and advisers together with our experienced support teams helped to deliver much stronger interim results for the Group than was considered possible when our offices closed their doors on 24 March.

Dividend

Given the strong financial performance of the Group in H1, the Board is pleased to announce the reinstatement of its progressive dividend policy with immediate effect. There will be an additional 2.0p dividend, payable with the interim dividend of 3.4p (H1 2019: 3.4p), a total of 5.4p per share, as partial compensation for the suspended final 2019 dividend with a view to a further catch-up payment at the time of the final 2020 dividend dependent on the Board assessment of the prevailing circumstances at that time.

Strategic opportunity

On 9 July 2020, Belvoir entered into a strategic alliance with The Nottingham Building Society. Under the agreement, the vast majority of The Nottingham's estate agency and lettings activity has now transferred over to the Belvoir Group and The Nottingham has ceased operating its own estate agency and lettings business. Going forward, the alliance will see a number of franchisees extending their estate agency and lettings services to new locations sited in co-branded existing Nottingham Building Society branches.

Outlook

The Group's lettings business scarcely missed a beat during the first half of 2020 with network lettings revenue comparable with 2019. With our latest Belvoir lettings survey currently indicating only a minimal increase in rent arrears, we have every confidence that the recurring nature of lettings will continue to underpin trading throughout the remainder of 2020. Meanwhile, although the lockdown caused a hiatus in house and related mortgage sales, activity in terms of instructions, sales agreed and new mortgages written have since exceeded all previous records. This is expected to result in a strong last quarter for sales fees and financial services income.

Having reported H1 profitability in line with our start of year expectations and given the high levels of activity within all areas of our business at the start of H2, the Board is optimistic that trading will be in line with its pre-Covid expectations for the full year.

Dorian Gonsalves

Chief Executive Officer

Financial Review

Revenue

Group revenue in the first six months of 2020 was up 8% to £9,774,000 (H1 2019: £9,047,000), an increment of £727,000 of which £572,000 reflects the January 2020 acquisition of the Lovelle network, and the remaining £155,000 represents a growth of 2% in the underlying business.

Within our property franchise division, MSF was down by only 1% to £4,157,000 (H1 2019: £4,201,000). MSF from lettings was relatively unchanged at £3,544,000 (H1 2019: £3,556,000) with our lettings activity affected by around 10% during April and May when the offices were closed, compared to the same months in 2019. The lockdown had a greater impact on estate agency with MSF from sales around 50% down on 2019 for those two months. However, the surge of activity when the offices re-opened saw a reasonable proportion of the sales agreed pre-Covid crystallise in the last six weeks of H1. As a result of this, plus strong Q1 sales transactions and the inclusion of twelve Lovelle sales offices from January 2020 which added MSF of £79,000, MSF from sales in H1 was down only 5% to £612,000 (H1 2019: £645,000).

In the year to date, eight of our franchise owners have completed on an assisted acquisition with a total deal value of £1,147,000 (H1 2019: £3,942,000) of which £132,000 (H1 2019: £663,000) was funded by a Central Office loan. Based on their historic results, these acquisitions added £1,474,000 p.a. (H1 2019: 4,194,000) to our franchisee network revenue, brought in 1,082 additional managed properties and increased annualised recurring MSF by £164,000 with a contribution of around £100,000 to MSF expected in 2020.

Revenue from corporate-owned offices was up 77% to £1,062,000 (H1 2019: £600,000) with our investment in the Lovelle network providing an additional £493,000 in revenue from the six corporate-owned offices brought temporarily into the Group prior to them being franchised out.

Franchise fees and other income, including insurance, conveyancing and other commissions, and fees for other services to franchisees, contributed £302,000 (H1 2019: £277,000).

Financial services revenue in H1 was up 7% to £4,253,000 (H1 2019: £3,969,000) as a result of a strong Q1 and the increase in our adviser network, up 38 advisers to 174 (H1 2019: 136). The latter mitigated the impact of the lockdown on business levels, such that by comparison to April and May last year financial services fee income was only 13% down.

Gross profit

Gross profit increased by 8% to £6,720,000 (H1 2019: £6,198,000) with the underlying business within 1% of H1 2019 and the acquired Lovelle network adding £572,000. As a result of the Lovelle acquisition, the property division was up 9% to £5,521,000 (H1 2019: £5,078,000). Our financial services division was up 7% mainly as a result of the enlarged adviser network.

Government Covid-19 support grants

The Group has benefitted from government Covid-19 support totalling £250,000 in respect of grants for nine corporate offices, and monies under the job retention scheme in relation to 36 staff who were furloughed, mostly from our estate agency branches, all of whom are now back working.

Administrative expenses

Administrative expenses increased by £314,000 to £3,751,000 (H1 2019: £3,437,000) which incorporated £36,000 of redundancy costs and £537,000 of additional costs associated with the Lovelle acquisition. The latter comprised £469,000 incurred operating six Lovelle corporate-owned estate and lettings agencies and supporting the Lovelle franchise network, £36,000 in one-off acquisition legal fees and £32,000 amortisation charge in respect of the associated acquired intangibles. Against these Lovelle costs, we received government Covid-19 support of £78,000. The underlying Belvoir business reported a £259,000 reduction in overheads as a result of a headcount reduction of 28 staff at the end of Q1, a voluntary lockdown salary reduction for senior personnel, home-based working, travel limited to essential only, negotiated discounts from suppliers on services during the lockdown that benefitted both the Group and our franchisees, and general tight cost control.

All our corporate-owned estate and lettings offices and central support offices have re-opened following government safety guidelines with some staff, who are able to work effectively remotely, continuing to work from home on alternate days so as to reduce numbers present in the office on any one day. Our central office team continues to support our franchisees remotely and we do not intend to resume face-to-face meetings other than where strictly necessary for the remainder of this year.

Profit before taxation

Profit before taxation for the period was up 17% to £3,164,000 (H1 2019: £2,695,000).

Taxation

The effective rate of corporation tax for the period was 19% (H1 2019: 19%).

Profit after taxation

Profit after taxation for the period was up 18% to £2,563,000 (H1 2019: £2,181,000).

Earnings per share

Basic earnings per share was up 16% to 7.3p (H1 2019: 6.3p) based on an average number of shares in issue in the period of 35,087,000 (H1 2019: 34,639,000). Diluted basic earnings per share was 6.9p (H1 2019: 5.9p) based on an average number of shares in issue in the period of 37,072,000 (H1 2019: 37,088,000). See note 6 to the interim statements for detailed breakdown of adjustments to profit and EPS calculations.

Dividend

Following the Board's prudent decision to suspend the 2019 final dividend at the start of the Covid-19 lockdown, the Board has decided to reinstate its progressive dividend policy with immediate effect. The interim dividend for 2020 will be maintained at 3.4p per share. At a cost of £1,193,000 (H1 2019: £1,188,000), the interim dividend cover is at 2.1x (H1 2019: 1.8x).

A further 2.0p will be paid with the interim dividend as a partial reinstatement of the suspended 2019 final dividend. Both are payable to shareholders on 30 October 2020 based upon the register on 18 September 2020. The ex-dividend date will be 17 September 2020.

Cash flow

On an operational level, the Group was highly cash generative with net cash inflow from operating activities after taxation at £3,056,000 (H1 2019: £2,366,000) reflecting the enlarged Group.

In January the Group completed on the acquisition of the Lovelle network, which comprised six corporate-owned offices and eleven franchised offices, for £1,974,000 cash consideration.

The Group has taken advantage of the Covid-19 government VAT deferral scheme which permitted the deferment of VAT payable of £473,000 in May 2020 until 31 March 2021.

Liquidity and capital resources

The Group had cash balances of £4,305,000 (H1 2019: £1,419,000) and a term loan of £10,022,000 (H1 2019: £10,915,000) leaving net debt of £5,717,000 (H1 2019: £9,496,000). The term loan is repayable in half yearly payments of £445,000 with a final repayment of £7,868,000 in March 2023 and bears interest at 1.95% over the LIBOR rate.

Financial position

The Group continues to operate from a sound financial platform generating sufficient cash from the operations of the enlarged Group to meet the interest and capital payable on the loan facility and dividends to shareholders. At the end of June 2020, the Group was comfortably inside its bank covenants with the debt service cover at 2.9 times (H1 2019: 3.1x). The Group maintains a franchisee loan book, currently at £2,974,000 (H1 2019: £3,925,000), which provides financial assistance to franchisees under the assisted acquisitions programme to accelerate their growth and therein contribute towards increased Group revenue.

The Group's operational and diversified business model underpinned by a strong recurring lettings revenue stream has helped to consistently deliver profit growth. Having reinstated our progressive dividend policy, the Group's capital allocation policy provides a reliable dividend with an attractive yield for investors, whilst retaining funding for the Group's growth strategy.

Louise George

Chief Financial Officer 

Condensed Group Statement of Comprehensive Income

For the six months ended 30 June 2020

Consolidated Statement of Financial Position

As at 30 June 2020

Consolidated Statement of Changes in Shareholders' EquityFor the six months ended 30 June 2020

Consolidated Statement of Cash FlowsFor the six months ended 30 June 2020

Notes to the Interim Financial Statements

1 General information and basis of preparation

The financial information set out in these condensed consolidated interim financial statements for the six months ended 30 June 2020 and the comparative figures are unaudited.

They have been prepared taking into account the requirements of relevant accounting standards and the AIM rules. They do not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006 and do not contain all the information required for full annual financial statements.

The statutory audited accounts for the year ended 31 December 2019 have been delivered to the Registrar of Companies in England and Wales. The Auditor's report on these accounts was unqualified and did not contain statements under Section 498 of the Companies Act 2006.

The condensed consolidated interim financial statements are presented in sterling, which is also the functional currency of the parent company.

Belvoir Group PLC is the group's ultimate parent company. The Company is a Public Limited Company incorporated and domiciled in the United Kingdom.

The Group's registered office and principal place of business is The Old Courthouse, 60a London Road, Grantham, Lincolnshire, NG31 6HR. Its shares are listed on the AIM market of the London Stock Exchange.

The condensed interim financial statements for Belvoir Group PLC have been approved for issue by the Board of Directors on 4 September 2020.

Going concern

The potential ongoing impact of the Covid-19 pandemic on the UK economy, and in particular the property sector, has been considered by the Directors. The Directors have revised the forecasts for the Group taking into account the resilience of its lettings performance, the impact of future possible Covid-19 related national or local lockdowns on its sales and financial services business and the upside expected in sales and related mortgage transactions from the governments reduction in stamp duty to March 2021.

After consideration of these forecasts, the Group's current financial position and trading, available cash resources and making appropriate enquiries, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence, to meet its bank covenants and to execute their plan for growth, for the foreseeable future. For this reason, they continue to adopt the going concern basis for preparing the accounts. Aside from Covid-19, there are no other material uncertainties, of which Directors are aware, that may cast doubt on the Group and Company's ability as a going concern by reference to the guidance issued by the Financial Reporting Standards on going concern assessment.

Significant accounting policies

The condensed consolidated interim financial statements have been prepared under the historical cost convention. Being listed on the AIM of the London Stock Exchange, the Company is required to present its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS's") as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

In preparing these interim financial statements, the Board have considered the impact of new standards which will be applied in the 2020 Annual Report and Accounts and there are not expected to be any changes in the accounting policies compared to those applied at 31 December 2019."

Government support for Covid-19

Other operating income relates to amounts receivable under the Coronavirus Job Retention Scheme ("CJRS") and local authority small business and retail, hospitality and leisure grant. The income is recognised in profit or loss on a systematic basis in the periods the expenses for the related costs for which the monies are intended to compensate are incurred and when any conditions related to the receipts are met.

Significant judgements and key sources of estimation uncertainty

There have been no revisions to the nature and amount of estimates compared to those reported in prior periods.

No significant judgements or estimates were required in relation to assessing whether the Group had reasonable assurance as to whether it complied with the conditions attached to government support associated with the Coronavirus pandemic which has been recognised in other operating income.

Additionally, the effects of Covid-19 have not required any revision to estimates of expected credit losses arising from loans and MSF receivables from franchisees or impairment of the carrying value of tangible or intangible assets. 

2 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 six months ended 30 June 2020 the Board identified two operating segments, that of franchisor of property agents, comprising income from lettings and property sales, and property-related financial services.

The Directors consider gross 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 any 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:

Gross profit for the two divisions is split as follows:

3 Other operating income

The Group applied for various government support programmes introduced in response to the global pandemic.

Included in profit and loss is £100,000 of amounts obtained under the CJRS relating to supporting the payroll of Belvoir's employees. Belvoir has elected to present this income separately, rather than reducing the related expense. Belvoir has committed to spending the assistance on payroll expenses, and does not have any unfulfilled obligations relating to this programme.

Also included in profit and loss is £150,000 of government support relating to local authority small business and retail, hospitality and leisure grants awarded to its corporate offices.

4 Dividends

The Company will pay an interim dividend of 3.4 pence per share (H1 2019: 3.4p), a cost of £1,193,000 (H1 2019: £1,188,000). Furthermore, the Company intends to compensate shareholders for the suspension of the final 2019 dividend, in the first instance by means of an additional dividend of 2.0 pence per share, a cost of £702,000. Both, a total of 5.4 pence per share, will be payable on 30 October 2020 to the shareholders on the register on 18 September 2020. The total dividend cost is £1,890,000. The ex-dividend date is 17 September 2020. Given the ongoing economic uncertainty, the Board will assess the Group's capacity to make a further "catch-up" dividend at the time of the 2020 final dividend based on the prevailing conditions at that time.

5 Taxation

Taxation has been calculated by applying the forecast full year effective rate of tax to the results for the period.

6 Earnings per share

Basic earnings per share is calculated by dividing the profit after tax for the financial period by the weighted average number of ordinary shares deemed to be in issue in the period. The calculation of diluted earnings per share is derived from the basic earnings per share, adjusted to allow for the issue of shares under share option plans.

7 Reconciliation of profit before taxation to cash generated from operations

8 Acquisitions

Lovelle acquisition

Newton Fallowell Limited, a wholly owned subsidiary, acquired the trade and assets of the estate agency business operated by Lovelle Estate Agency Limited and Lovelle Bacons LLP (collectively referred to as "Lovelle") on 6 and 20 January 2020 respectively. The acquisition was part of the Group's ongoing multi-brand franchising strategy with the aim of increasing the Group's presence in the franchised property sector and opening up additional growth opportunities.

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

The goodwill represents the value attributable to the new businesses and the assembled and trained workforce. Deferred tax at 19% has been provided on the value of intangible assets defined as brand names and master franchise agreements.

In H1 the acquired Lovelle network, incorporating twelve franchised and six corporate-owned offices, contributed revenue of £572,000 and profit before tax of £181,000.

Northwood Glossop

A further payment of £8,000 has been made in relation of the acquisition of the Northwood Glossop portfolio.

9. Prior year restatement

In the financial statements for the year ended 31 December 2019, the Directors decided to restate certain items. The comparative 2019 interim figures have been restated on the same basis as detailed below:

Unearned indemnity commission

In the 2019 interim results the liability to unearned indemnity commission net of amounts recoverable from financial advisers was treated as an accrual which was offset by an amount recoverable from the financial advisor. The June 2019 balances have been restated to recognise the gross unearned indemnity commission as a refund liability and the amount recoverable from the financial advisers within other debtors.

Deferred tax on acquired intangibles

The June 2019 deferred tax liability has been restated by £42,000 to reflect the release of deferred tax in H1 2019 in line with amortisation on acquired intangibles.

Deferred tax asset on share options

The June 2019 deferred tax asset has been restated by £18,000 to reflect the deferred tax asset associated with share-based payments.