BLV.L Regulatory News (BLV)

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BELVOIR! BELVOIR GROUP PLC

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

Trading Update and Notice of Preliminary Results

FY22 trading is up on managements' expectations

Belvoir Group PLC (AIM:BLV), a leading UK property franchise and financial services Group, is pleased to provide the following pre-close trading update for the year ended 31 December 2022.

Group revenue increased to a record level, up 13% to £33.5m* (2021: £29.6m). The housing sector performed better in 2022 than many commentators had forecast at the start of the year, with UK residential sales transactions down 15% on 2021, but around 6% ahead of pre-pandemic levels, and rents on new tenancies increasing by 10.8% during the year. Consequently, Belvoir's financial performance for the year, including profit before tax, is anticipated to be slightly ahead of managements' expectations.

During the year the Belvoir Group extended its reach through the acquisitions of TIME Mortgage Services ("TIME"), which expanded the Group network of mostly self-employed financial services advisers, and Mr and Mrs Clarke ("MMC"), which provided a platform from which to develop Belvoir's personal estate agency franchise model. Since being acquired in May and March 2022 respectively, TIME has already contributed revenue of £2.6m and MMC has gained further traction in recruiting agents into six new territories.

Revenue from the financial services division increased by 24% to £17.9m* (2021: £14.4m), with the network of financial advisers increasing by 21% to 294 (2021: 243). As demand for new purchase mortgages fell back reflecting the lower level of activity in the residential sales market, our advisers benefitted from their extensive client books with demand for re-mortgages increasing as interest rates started to rise.

Revenue from the property division was up 1% to £15.5m* (2021: £15.3m) with the lettings to sales ratio at 77:23 (2021: 74:26). Management service fees ("MSF"), the key underlying return from franchisees, continued to grow, up 2% for the year to £10.9m* (2021: £10.7m) with the stronger lettings market more than mitigating lower sales activity. Furthermore, the Group's highly successful assisted acquisitions strategy regained momentum following two years of subdued activity due to Covid, and enabled franchisees to complete on 14 (2021: 7) assisted acquisitions, which added £3.9m p.a. (2021: £1.2m) in franchisee revenue.

The highly cash generative nature of the Group's operating activities, underpinned primarily by the recurring lettings business, enabled the Group to move into a positive net cash position of £1.1m* at the year-end (2021: £1.3m net debt), despite having deployed £4.0m of cash on corporate acquisitions.

The mini budget in September 2022 created a high degree of uncertainty within the property and related financial services markets. Between August and December, base rates doubled from 1.75% to 3.5% which led to a rapid rise in mortgage lending rates, the withdrawal of many mortgage products by lenders and a tightening of mortgage criteria. This impacted on instruction levels for house sales and demand for mortgages in Q4 which will in turn impact trading in H1 of 2023. At the same time, borrowers with mortgage offers were keen to complete on their house purchases before their offer expired, resulting in the level of fall-through of transactions in Q4 being minimal.

The Autumn statement reversed many of the fiscal initiatives proposed in the mini budget, which somewhat reassured borrowers and lenders. Whilst the level of sales instructions and mortgage applications to date in 2023 have shown signs of improvement compared with Q4 2022, the recovery is expected to build slowly over the year. Given the lead time from instruction to completion of a house sale and from mortgage application to drawdown can be up to five months, the improvement in activity in H1 is not likely to flow through into financial performance until H2. As a result, profitability in 2023 as a whole is likely to be slightly below 2022 and is expected to return to an upward trend in 2024.

Dorian Gonsalves, CEO, commented:

"I am delighted to report that during 2022 our acquisition strategy both at Group and at franchisee level enabled Belvoir to both extend its service offering and mitigate the lower level of activity in the housing market following the exceptionally strong conditions in 2021.

"Our property franchisees and financial services advisers are highly motivated entrepreneurs who continue to demonstrate the ability to make the most of the opportunities presented in all market conditions. Our property franchisees benefit from significant recurring lettings revenue that contributes around 56% of Group gross profit and our financial services advisers have substantial client books from which to offer remortgages and other financial products, so are not entirely reliant on new mortgage business.

"Whilst we anticipate continuing challenging market conditions in 2023, we remain confident that the resilience and diversity of our business model will enable the Group to perform well against the market as a whole. As always, the Board will continue to identify suitable acquisition targets to support continued growth and enhance shareholder value still further."

Notice of Full Year Results

The audited results for the financial year ended 31 December 2022 will be announced on Monday, 27 March 2023.

*unaudited

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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 seven 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