Trading is ahead of expectations at Belvoir, for the ten months to the end of October 2021, with both of the group’s divisions, property and financial services, achieving year-on-year growth.
The Lincolnshire-headquartered company noted that its property division, which contributed 77% of the group’s gross profit, achieved gross profit growth of 29%.
Income from lettings was 21% up on 2020 resulting from unprecedented demand for rental properties with rents increasing in all areas of the UK, as well as the acquisition of Nicholas Humphreys, a predominantly student lettings network.
Meanwhile, income from sales was up 65%, mainly a result of the strongest market for property transactions seen since 2007.
The financial services division, which contributed 18% of the group’s gross profit, continued its strong growth with gross profit up by 39%.
Belvoir’s network of mortgage advisers increased by 21% from 202 at the start of the year to 245 by the end of October. This represented a net increase of 43, which arose through organic recruitment and 21 from the acquisition of Nottingham Mortgage Services, the mortgage arm of The Nottingham Building Society.
The group remained focused on meeting the demand for house purchase mortgages for much of 2021, and now, given signs that interest rates might rise, are benefitting from a busy period for remortgages.
The group’s operating activities continue to be highly cash generative underpinned by Belvoir’s significant recurring lettings income stream. As of today, net debt is down to £2.7m (31 December 2020: £3.7m) despite having deployed £4.0m of cash in March to acquire the Nicholas Humphreys network and £0.6m in July to acquire Nottingham Mortgage Services.
Current substantial pipelines of house sales and written mortgages support Belvoir’s end of year forecasts. Consequently, the board expects that the performance for the full year, in terms of profit before tax, will be ahead of management’s expectations for 2021 and substantially ahead of 2020.
Dorian Gonsalves, CEO, said: “In 2021 we have seen our franchisees and mortgage advisers take advantage of an exceptionally strong sales market. The sector undoubtedly benefitted hugely from the Government’s decision to extend the stamp duty holiday until September 2021, following which we have seen a predictable slowing in the number of new instructions as the market normalises.
“We anticipate that given the ongoing pent-up demand from buyers, the market will return to more usual transaction levels in 2022. In the meantime, our current pipelines remain strong and support outperforming our end of year forecasts.
“The board is mindful that 2022 is likely to present further challenges for the wider economy, but we are confident in our business model of supporting entrepreneurial franchisees and mortgage advisers to achieve their business ambitions, and that our growth strategy of organic growth coupled with investment in profitable property franchise and mortgage networks will continue to prove successful and deliver long-term shareholder value.”
