Belvoir Group PLC reinstates dividend as trading continues to meet expectations
The lettings market remains resilient as demonstrated throughout the pandemic, while the sales and financial services markets are expected to remain buoyant thanks to government measures
() reinstated its dividend and said trading in the year to date has been encouraging and in line with management expectations.
The estate agent said the lettings market remains resilient as demonstrated throughout the Coronavirus (COVID-19) pandemic, with the sales and financial services markets expected to remain buoyant following the extension of the stamp duty holiday until September. This will be boosted further by the government’s new 95% mortgage guarantee scheme.
READ: Belvoir Group acquires estate agent and letting chain for £4mln in earnings accretive deal
The firm noted that it is mindful of the uncertainty over the longer-term implications for the economy but is confident in its business model and balance sheet strength.
Chief executive Dorian Gonsalves said in a release that full-year performance during 2020 topped expectations thanks to strong trading in the second half and a reduction in overheads.
“Alongside organic growth, Belvoir’s acquisition strategy continues to focus on investing in successful businesses that either expand our franchise footprint or introduce additional revenue streams to our franchisees, where there is scope for greater growth as part of the group,” he commented alongside the final results.
“2020 saw the Belvoir Group enter into a strategic alliance with the Nottingham Building Society announced in July 2020 and more recently we added Nicholas Humphreys to our franchise network. The board continues to identify suitable targets that meet its acquisition criteria and which can deliver healthy returns on investment.”
In the year to December 31, revenue increased by 13% to £21.7mln, 6% of which was attributable to the acquisition of Lovelle.
Management Service Fees (MSF), the group’s core income from franchisees, grew by 3% to £9.1mln, while profit before tax surged by a fifth to £6.7mln, marking 24 years of consecutive profit growth.
Year-end cash stood at £5.9mln from £3.6mln in December 2019, while net debt was cut to £3.7mln from £6.9mln.
The dividend was reinstated, with total distribution for the year rising to 7.2p from 6.7p in 2019.
Belvoir also repayed £260,000 received by the government under the Coronavirus Job Retention Scheme and small business grants.
Target price bumped up
Analysts at house broker finnCap () said the results were “very strong” and upgraded the target price from 233p to 285p to reflect its potential in the coming months.
“The relatively low risk and capital light nature of the group’s franchise model and its ability to attract and motivate entrepreneurs in the sector continues to deliver strong returns,” they commented.
“A shift to remortgages and life protection products partially offset the shortfall in new mortgages during the first lockdown and then the surge in house sales in the second half benefitted. Around 45% of the group’s agencies now offer Belvoir financial services, leaving significant potential for further growth.”
Shares were trading at 209.45p on Monday morning, having jumped 31% in the year to date.
Read More: Belvoir Group PLC reinstates dividend as trading continues to meet expectations