BLV.L Regulatory News (BLV)

For Immediate Release 5 October 2015

BELVOIR LETTINGS PLC

(the "Company" or "Belvoir")

Acquisition of Goodchilds Estate Agents and Lettings Limited and Oversubscribed Placing and Subscription to raise £3.6 million

Posting of Circular to Shareholders and Notice of General Meeting

Belvoir Lettings plc (AIM: BLV), one of the UK's largest lettings franchises, is pleased to announce that on 2 October 2015 it entered into an agreement to acquire the entire issued share capital of Goodchilds, a franchise property sales and lettings business based mostly in the West Midlands, for a total consideration of £3.26 million.

As part of the transaction, Belvoir is also pleased to announce that Cantor Fitzgerald Europe has coordinated a Firm Placing, Conditional Placing and Subscription to raise in aggregate £3.6 million by way of the issue of 3,112,346 new Ordinary Shares at the Placing Price of 116 pence each.

The Firm Placing Shares and Conditional Placing Shares are being placed with certain existing and new institutional and other investors. In addition, certain of the Directors are participating in the Firm Placing while the Subscription is being undertaken by members of the senior management of Newton Fallowell, the East Midlands based business acquired by Belvoir in July. Further details are set out below.

Highlights

· Initial consideration of £1.63 million in cash (subject to any required adjustments) together with deferred consideration of £0.81 million in cash to be paid immediately after the General Meeting on 22 October 2015 and £0.81 million in cash, to be paid in equal parts, 6 and 12 months following Completion of the Acquisition.

· The Initial Consideration will be funded from the Company's existing resources and the first £0.81 million of the Deferred Consideration will be funded from the proceeds of the Conditional Placing.

· The First Tranche Firm Placing, Second Tranche Firm Placing, the Subscription and the balance of proceeds from the Conditional Placing will be used to augment the Company's working capital.

· Following the acquisition of Newton Fallowell in July 2015, this Acquisition is the next phase of Belvoir's strategy to extend its reach through the acquisition of other franchised networks.

· Goodchilds in the West Midlands, together with Newton Fallowell in the East Midlands, combine to offer complementary strengths in lettings and property sales across the Midlands.

· The Acquisition will be supported by the Group's existing infrastructure.

· Significantly increases the Belvoir Group's market presence, adding 16 outlets. Following completion of the Acquisition the Enlarged Group will consist of 211 outlets nationwide.

· Expected to be accretive to Belvoir's earnings per share in first full financial year following Completion of the Acquisition.

· Belvoir continues to trade positively with managed service fees up 14% on the same period last year and a profit after tax of £0.60m in the first half of the Company's current financial year.

· A General Meeting of the Company in respect of the Conditional Placing is to be held at Buchanan Communications Limited at 107 Cheapside, London EC2V 6DN at 10.00 a.m. on Thursday, 22 October 2015

Mike Goddard, Executive Chairman and Chief Executive, Belvoir commented:

"We are delighted to be announcing the Acquisition of Goodchilds. This is an exciting milestone in Belvoir's growth, considerably expanding the size of the Group.  Following the acquisition of the Newton Fallowell business in July, this acquisition marks further success in pursuing our multi brand strategy in order to increase market share and geographic coverage. Goodchilds is a clear strategic fit and we are looking forward to welcoming their franchise owners to the Group.

I'd like to thank our shareholders for their continued support and welcome our new shareholders as we continue to grow the business across the UK."

For further details:

Background to the Transaction

Information on Goodchilds

Goodchilds has a network of 16 property sales and lettings branches located across the West Midlands, a geographical area bordered by Stoke-on-Trent, Atherstone, Birmingham and Telford as well as a franchise in Milton Keynes. The business was established in 2004 in Wolverhampton by David Warke as a lettings agency.

The unaudited financial statements for the year to 31st January 2015 showed revenue of £671,000 and net profit before tax of £80,000.

The summary unaudited management accounts of Goodchilds in the 12 months to 31 July 2015, on which the consideration was based, were adjusted to reflect that the two corporate outlets would be franchised on acquisition and the transfer out of certain non-franchise activities. The adjusted revenue for the year to 31 July 2015 was £469,000 and net profit was £434,000.

Strategic Rationale for the Acquisition, Placing and Subscription

The Company's strategy is to increase market share and geographical coverage by pursuing acquisition opportunities and by providing partial funding for franchisee-led acquisitions. The Board has identified opportunities to leverage its expertise as a franchisor by investing in other property franchise operations to support a multi brand model. The Acquisition is in line with this strategy.

The Board considers Goodchilds to be a clear strategic fit with Belvoir and believes the Acquisition will provide a number of commercial, operational and financial benefits which are expected to create value for Shareholders. In particular:

• Goodchilds is an established network in the West Midlands with territories adjacent to East Midlands territories of the recently acquired Newton Fallowell network. The Enlarged Group provides a platform for further geographic expansion;

• Goodchilds has an established market for both lettings and property sales with a revenue split of 70% lettings and 30% estate agency in the 12 months to 31 July 2015;

• Goodchilds' franchise network will benefit from the Group's highly professional support infrastructure;

• the Board does not envisage significant integration costs arising from the Acquisition; and

• the Acquisition is expected to be earnings accretive in the first full financial year following Completion of the Acquisition.

Details of the Acquisition

On 2 October 2015, the Company entered into the Acquisition Agreement with the Seller to acquire the entire issued share capital of Goodchilds, for an aggregate sum not exceeding approximately £3.26 million in cash based on adjusted earnings of £434,000 for the year ended 31 July 2015, to be satisfied as follows:

• the Initial Consideration, being 50% of the expected total consideration (subject to adjustment) will be paid by Belvoir in cash at Completion of the Acquisition;

• the first part of the Deferred Consideration, being 25% of the expected total consideration will be payable by Belvoir in cash immediately after the General Meeting on 22 October 2015; and

• the second part of the Deferred Consideration, being 12.5% of the expected total consideration will be payable by Belvoir in cash 6 months after Completion of the Acquisition; and

• the third part of the Deferred Consideration, being 12.5% of the expected total consideration will be payable by Belvoir in cash 12 months after Completion of the Acquisition.

Michael Warke will continue in the business as a franchise owner operating Goodchild's two previously corporate offices.

Completion of the Acquisition is conditional on First Admission taking place, although not dependent on the receipt of the proceeds from the First Tranche Firm Placing. If the condition is not satisfied on or before 6 October 2015 or, if applicable, waived, the Acquisition will not proceed. The proceeds of the First Tranche Firm Placing will be used to augment working capital.

Details of the Placing and the Subscription

Cantor Fitzgerald Europe is acting as nominated adviser, broker and placing agent in connection with the Placing.

Under the terms of the Placing, Cantor Fitzgerald Europe has placed 2,361,041 Firm Placing Shares and 711,305 Conditional Placing Shares at the Placing Price with existing and new investors, raising gross proceeds of approximately £2.74 million and £0.83 million respectively. In addition, certain members of the senior management of Newton Fallowell have subscribed for 40,000 Ordinary Shares at the Placing Price to raise £46,400.

Certain of the Directors have participated in the Firm Placing, as shown below:

* assuming Admission of the Firm Placing Shares and Subscription Shares only.

The Placing Price represents a discount of 4.9 per cent. to the Closing Price of 122 pence per Ordinary Share on 2 October 2015, being the last dealing day prior to the date of this Announcement.

In connection with the Placing, the Company has entered into the Placing Agreement pursuant to which Cantor Fitzgerald Europe, as agent for the Company, has agreed to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. The Placing is not being underwritten.

The Placing Agreement contains customary warranties given by the Company to Cantor Fitzgerald Europe with respect to the Company's business and customary indemnities given by the Company to Cantor Fitzgerald Europe in respect of liabilities arising out of or in connection with the Placing. Cantor Fitzgerald Europe is entitled to terminate the Placing Agreement in certain circumstances prior to Third Admission, including circumstances where any of the warranties are found not to be true or accurate or were misleading and which in any such case is material, or on the occurrence of certain force majeure events.

The First Tranche Firm Placing

Application has been made for the 1,667,346 First Tranche Firm Placing Shares to be admitted to trading on AIM. It is expected that First Admission will take place on 6 October 2015.

The First Tranche Firm Placing (raising gross proceeds of £1.93 million at the Placing Price) is conditional, inter alia, on:

• Completion of the Acquisition Agreement (subject only to First Admission);

• the conditions in the Placing Agreement relating to the First Tranche Firm Placing being satisfied (or, if applicable, waived) and the Placing Agreement not having been terminated in accordance with its terms prior to First Admission of the First Tranche Firm Placing Shares; and

• First Admission becoming effective by no later than 8.00 a.m. on 6 October 2015 (or such later time and/or date as the Company and Cantor Fitzgerald Europe may agree, but in any event not later than 8.00 a.m. on 13 October 2015).

The First Tranche Firm Placing Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid on the ordinary share capital of the Company after First Admission (save for the 2015 Interim Dividend), and will otherwise rank on First Admission pari passu in all respects with the Existing Ordinary Shares. The First Tranche Firm Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

The First Tranche Firm Placing Shares will together represent approximately 5.73 per cent. of the enlarged share capital of the Company immediately following First Admission. Following First Admission the Company will have 29,101,763 Ordinary Shares in issue.

The Second Tranche Firm Placing

Application has been made for the 693,695 Second Tranche Firm Placing Shares and the 40,000 Subscription Shares to be admitted to trading on AIM. It is expected that Second Admission will take place on 7 October 2015.

The Second Tranche Firm Placing and the Subscription (raising gross proceeds of £0.85 million at the Placing Price) are conditional, inter alia, on:

• the conditions in the Placing Agreement relating to the Second Tranche Firm Placing being satisfied (or, if applicable, waived) and the Placing Agreement not having been terminated in accordance with its terms prior to Second Admission of the Second Tranche Firm Placing Shares and the Subscription Shares; and

• Second Admission becoming effective by no later than 8.00 a.m. on 7 October 2015 (or such later time and/or date as the Company and Cantor Fitzgerald Europe may agree, but in any event not later than 8.00 a.m. on 14 October 2015).

The Second Tranche Firm Placing Shares and the Subscription Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid on the ordinary share capital of the Company after Second Admission (save for the 2015 Interim Dividend), and will otherwise rank on Second Admission pari passu in all respects with the Existing Ordinary Shares. The Second Tranche Firm Placing Shares and the Subscription Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

The Second Tranche Firm Placing Shares and the Subscription Shares will together represent approximately 2.46 per cent. of the enlarged share capital of the Company immediately following Second Admission. Following Second Admission the Company will have 29,835,458 Ordinary Shares in issue.

The Conditional Placing

In order to undertake the Conditional Placing, Belvoir needs to seek approval from the Company's shareholders at a General Meeting, notice of which will be set out in a circular to shareholders that will be posted shortly (the "Circular"). The General Meeting will be held at the offices of Buchanan Communications Limited at 107 Cheapside, London EC2V 6DN at 10.00 a.m. on Thursday, 22 October 2015.

Application will be made for the 711,305 Conditional Placing Shares to be admitted to trading on AIM and it is expected that Third Admission will take place on 23 October 2015.

The Conditional Placing is conditional, inter alia, upon:

• the passing of the Resolution at the General Meeting;

• the conditions in the Placing Agreement relating to the Conditional Placing being satisfied (or, if applicable, waived) and the placing agreement not having been terminated in accordance with its terms prior to Third Admission; and

• Third Admission becoming effective by no later than 8.00 a.m. on 23 October 2015 (or such later time and/or date as the Company and Cantor Fitzgerald Europe may agree, but in any event not later than 8.00 a.m. on 30 October 2015).

The Conditional Placing Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid on the ordinary share capital of the Company after Third Admission (save for the 2015 Interim Dividend), and will otherwise rank on Third Admission pari passu in all respects with the Existing Ordinary Shares. The Conditional Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

The Conditional Placing Shares will represent approximately 2.33 per cent. of the Enlarged Share Capital. Following Third Admission of the Conditional Placing Shares, the Company will have 30,546,763 Ordinary Shares in issue.

Notice of General Meeting and Posting of Circular

The General Meeting of the Company at which the Resolution is to be proposed is being convened to be held at the offices of Buchanan Communications Ltd at 107 Cheapside, London, EC2V 6DN at 10.00 a.m. on 22 October 2015. The Circular to Shareholders containing notice of that General Meeting along with details of the Acquisition and the Placing will be sent to Shareholders shortly.

Recommendation of the Board

The Board considers that the passing of the Resolution is in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends Shareholders to vote in favour of the Resolution to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings of 8,208,632 Ordinary Shares representing approximately 29.92 per cent. of the Company's existing issued Ordinary Shares.

Current Trading of Belvoir Group

The Company continues to trade positively with managed serviced fees ("MSF") up 14% in the first half of the current financial year compared to the corresponding period last year.

Since the year end in December 2014 the company has recruited four new territories.

Belvoir's interim results announced on 9 September 2015 showed profit after tax was maintained at £0.60m (H1 2014: £0.61m) despite the effect of the Election while the Company has experienced a positive start to the second half of the year.

Expected Timetable

Note to Editors:

About Belvoir Lettings PLC

Belvoir was founded in February 1995 by Mike and Stephanie Goddard and operates from its Central Office in Grantham, Lincolnshire. Belvoir successfully listed on the AIM market of the London Stock Exchange on 21 February 2012.

Belvoir is recognised as one of the largest specialist lettings agency franchises in the UK, with 164 outlets nationwide. The company offers a specialist service in property rental, property management, residential lettings, buy to let and now property sales, in selected locations. Each local Belvoir office is owned and personally managed by local owners, operating under licence from Belvoir Property Management (UK) Ltd.

Belvoir was officially awarded the Best Lettings Agency Franchise Gold Award at the 2015 Agency of the Year Awards in association with The Sunday Times & The Times for the 5th time in the 6 years of the awards history.

In July 2015 Belvoir acquired Newton Fallowell Ltd, a network of 30 franchised and one corporate estate and lettings agencies, and is now committed to developing a multi-brand franchising strategy. Across the two networks, the Group operates through 195 outlets.

Definitions

In addition to the terms defined above in this announcement, the following additional definitions apply throughout this announcement (unless the context requires otherwise):