Interim results presentation 2015

Interim results for
the period ending
30 June 2015
Mike Goddard Chairman and Chief Executive Officer
Louise George Finance Director
Overview
•
•
•
•
Strong Management Service Fee (“MSF”)
growth of 14%
Franchise recruitment recovered after
election uncertainties in H1
Post tax profits maintained at £0.6million
Post period end acquisition of estate agency
franchise network of 31 outlets
•
First step into a multi-brand strategy
•
Interim dividend unchanged at 3.4p
1
Financial review
Louise George
Statement of
comprehensive income
6 months to 30 June
Revenue
Administrative expenses
H1 2015
H1 2014
FY 2014
£’000
£’000
£’000
2,675
3,257
6,507
(2,073)
(2,528)
(4,887)
Operating profit
602
729
1,620
Finance costs
(33)
(74)
(111)
Finance income
178
118
269
747
773
1,778
(151)
(168)
(434)
596
605
1,344
pence
pence
pence
EPS
2.5
2.5
5.6
Dividend for the year
3.4
3.4
6.8
Profit before tax
Taxation
Profit after tax
3
MSF growth
£300,000
£280,000
£260,000
£240,000
£220,000
Income
4
6 per. Mov. Avg. (Income)
May-15
Feb-15
Nov-14
Aug-14
May-14
Feb-14
Nov-13
Aug-13
May-13
£200,000
Feb-13
Further 1.8% increase stems from
roll-out of estate agency
Nov-12
•
MSF boosted by 6.9% from franchisee
acquisitions part-funded by Belvoir
£320,000
Aug-12
•
Like-for-like growth of 5.7% exceeds
rental index growth of 2.5%
May-12
•
Strong MSF growth of 14%
Feb-12
•
Financial
highlights
Revenue and profit before tax (£m)
Revenue of £2.68m
• Underpinned by MSF growth of 14% to £1.76m
• Franchise fees down due to election uncertainty in H1
• Corporate outlets revenue and costs down 39% and 32%
3.5
respectively reflecting planned change in mix of outlets
2.5
•
Other income down £0.40m as no corporate outlets were
franchised in the period
4
3
2
1.5
Admin (ex corp) expenses down £0.17m
• Lower reliance on outsourced professional fees
• No requirement to write off bad debts (H1 2014: £0.07m)
Post tax profit of £0.60m (H1 2014: £0.61m)
• EPS maintained at 2.5p (H1 2014: 2.5p)
• Interim dividend unchanged at 3.4p
5
1
0.5
0
2012 2012 2013 2013 2014 2014 2015
H1
H2
H1
H2
H1
H2
H1
Revenue
PBT
Statement of
financial position
Franchisee transactions
• Belvoir assisted franchisee acquisition in
•
June 2014
Dec 2014
£’000
£’000
£’000
Bury in May 2015
Fixed assets
2,141
3.617
2,125
Devizes franchise becomes corporate
office
Loans to franchisees
4,836
3,524
4,965
Trade and other
receivables
967
1,629
961
Cash and cash
equivalents
1,124
2,230
1,486
Total assets
9,068
11,000
9,537
756
2,040
725
1,250
1,502
1,521
278
419
297
Total liabilities
2,284
3,961
2,543
Total equity
6,784
7,039
6,994
Robust balance sheet
• Period end bank balance of £1.1m
• Funds available to support further
franchisee acquisitions
•
June 2015
Bank loan repayable quarterly to Dec 2017
Trade and other payables
Bank loans
Tax – payable and
deferred
6
Statement of
cash flow
Franchisee transactions
• Acquisition of Devizes
franchise for £111,000
•
•
June 2015
June 2014
Dec 2014
£’000
£’000
£’000
EBITDA
696
782
1,877
Movements in working capital
24
(43)
(1,176)
Tax paid
(172)
(284)
(454)
Cash generated from operations
548
455
247
(7)
(109)
(318)
(111)
-
1,147
Loans advanced to
franchisees of £243,000
Capital expenditure
Franchisee loan repayments of
£372,000
Franchisee loans – net movement
129
(1,666)
(2,372)
Finance income
178
118
269
Cash flows from investing activities
189
(1,657)
(1,274)
Bank loan repayments
(250)
(725)
(790)
Equity dividends paid
(816)
(816)
(1,633)
Finance costs
(33)
(74)
(111)
(1,099)
(1,615)
(2,534)
(362)
(2,817)
(3,561)
Cash and bank lending
• Bank loan repayments of
£250,000
Dividend payment
• Final 2014 dividend of 3.4p
paid paid in the period
(Acquisition)/disposal of owned outlets
Cash flows from financing activities
Net cash movement
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Operational Review
Mike Goddard
Group growth
strategy
•
Franchisee recruitment
•
Franchisee acquisitions
•
Property sales
•
Award-winning service
•
Multi-brand strategy
9
Franchisee
recruitment
Recruitment in H1 challenging
•
•
•
The General Election caused uncertainty with the
possible introduction of rent controls and a ban on
tenant fees
Recruitment pipeline now restored reflecting
renewed stability within the sector
1 new recruit in H1 and 4 since period end
New territories: 5
Resales: 3
Closed offices: 1
Continuing to expand the Belvoir reach across the UK
Network: 166 including 8 corporate offices
10
Franchisee
acquisitions
•
•
Part-funding franchisee acquisitions is a key part of
achieving network and Group growth
In May Belvoir Bury and Oldham acquired the
business of Rayson Wilshaw in Bury :
•
•
•
Doubling the size of their business and gaining a
foothold in the Bury estate agency market
Belvoir provided a loan for 50% of the
acquisition price
Additional MSF and interest earned should
achieve a target ROI of between 25%-35%
Belvoir Bury outlet
•
Further franchisee acquisitions in the pipeline for H2
11
Property sales
•
•
•
•
•
Property sales boosted MSF in H1 revenue by
1.8%
53 outlets now trained to offer estate agency
service
Adding around 10 new outlets per quarter
On target to get at least 35% of network
offering sales by the end of 2015
Peterborough, one of the pilot offices, agreed
£1million of property sales with a single client
Selection of properties sold and for sale in Peterborough
12
Award winning
service
•
Gold : Lettings Franchise of the Year
•
Lettings Agency of the Year Awards 2015 in
association with The Times and The Sunday Times
•
5th Gold Award in 6 years
•
Judges referred to perpetual success
•
•
Credited it to the continual investment in the audit team
maintaining high standards and support for franchisees
Award is the longest running recognition focused solely
on lettings and most sought after in industry
13
Multi-brand
strategy
•
•
Acquisition of Newton Fallowell in July 2015
Network of 30 franchise and one corporate estate and lettings agencies
in the East Midlands
•
Initial consideration of £3.9m
•
Funded by placing of 3,424,000 shares raising £4.28m (gross)
•
Earn-out of up to a further £2.4m based on results to February 2017
•
Earnings accretive in first full year
14
Market update
•
•
•
•
Recent pension reforms are expected to have an
impact on the BTL market with 42% of respondents
to a recent ONS study stating that they believe
property to be the secret to achieving the largest
retirement fund
It is estimated that up to one million more renters will
be looking for homes in the next five years
Over 4 million people rent privately in England. The
Intermediary Mortgage Lenders Association (IMLA)
predicts that more than half of Britain’s homes could
be rented by the year 2032
Our own Q1 Rental Index shows a rise in rents of
2.5% which indicates continued, steady growth over
the last 12 months
15
“Of the four million households
in the private rented sector,
around 50% of private landlords
use the services of a letting
agent”
Summary and outlook
Summary
• Strong underlying network growth
•
•
Further growth achieved through franchisee
acquisitions and estate agency roll out
Franchise recruitment pipeline restored following
uncertainty in H1
Outlook
• First step into multi-branding with acquisition of
Newton Fallowell
•
•
Belvoir well positioned to take advantage of
further consolidation in the sector
On target to achieve market expectations for 2015
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