Trading is “comfortably ahead of expectations” at Belvoir Group, the property franchise and financial services Group with its central office in Grantham, according to an update for the year ended 31 December 2021.
Revenue was up 36% to £29.6m (2020: £21.7m), a record level, and consequently it expects that the financial performance for the year, including profit before tax, will be comfortably ahead of management’s expectations.
2021 was one of the busiest years in recent times for estate agency, with residential property sales transactions up 41% on 2020 and 22% ahead of the six-year average to 2019.
In addition to achieving strong growth in the underlying business, the Group expanded both its property and financial services networks through the acquisitions of Nicholas Humphreys, a specialist student lettings franchise, and Nottingham Mortgage Services, the mortgage arm of The Nottingham Building Society (The Nottingham).
Revenue from the financial services division increased significantly by 49% to £14.4m (2020: £9.7m), having grown the network of financial advisers by 20% to 243 (2020: 202), 17 of whom were advisers for The Nottingham. Financial services benefitted from the buoyancy in the residential property sales market throughout most of 2021, and towards the end of the year experienced a strong period for remortgage activity.
Revenue from the property division was up 27% to £15.2m (2020: £12.0m). The acquisition of the Nicholas Humphreys network added £2.2m from its 17 franchised and three corporate-owned offices. Having franchised out five of the Lovelle corporate-owned offices towards the end of 2020 as planned, £0.9m of sales and lettings fees were replaced by £0.1m of Management Service Fees and overheads were reduced by £0.8m.
Management service fees (MSF), the key underlying return from franchisees, was up 18% for the year to £10.7m (2020: £9.1m).
Sales MSF increased significantly by 56% to £2.5m (2020: £1.6m), with the extension of the stamp duty holiday ensuring that the residential sales market remained highly active until September. Thereafter, the market returned to more normal transaction levels with unfulfilled demand continuing to fuel house price inflation.
Lettings MSF increased by 10% to £8.2m (2020: £7.5m) of which £0.3m related to the Nicholas Humphreys acquisition and newly franchised Lovelle offices. The underlying lettings MSF increase of 6% reflected a strong lettings market. The demand for more space and a return of young people to UK cities as offices re-opened post lockdown resulted in insufficient supply of available properties to rent and as such rents on new tenancies were seen to rise by around 8%.
Dorian Gonsalves, CEO, said: “All of the Group’s business units performed exceptionally well in 2021, ensuring that our franchisees and advisers were best-placed to take advantage of a strong property market. In addition, the Board furthered Belvoir’s successful growth strategy through two corporate acquisitions to enlarge our franchise and mortgage adviser networks.
“With our significant recurring lettings revenue stream and our substantial financial services client base to draw upon during what is currently a strong market for remortgages, we believe the Group is well insulated from what could be a more challenging market in 2022.
“Given the resilience and diversity of our business model, we remain confident that we will continue to perform well relative to the market as a whole. Meanwhile, the Board continues to identify suitable acquisition targets to support continued growth and enhance shareholder value still further.”
