Acquisition & Trading Update
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR")
12 December 2019
BELVOIR GROUP PLC
(the "Group", "Company" or "Belvoir")
Earnings Accretive Acquisition
Belvoir Group PLC (AIM:BLV), the UK's largest property franchise, is pleased to announce that Newton Fallowell Limited, a wholly owned Belvoir Group subsidiary, has today agreed to acquire the business and assets of the estate agency business operated by Lovelle Estate Agency Limited and Lovelle Bacons LLP (collectively referred to as "Lovelles"). Lovelles is an award winning privately owned independent predominantly franchised estate agency network operating in Lincolnshire and the Humber region with 19 branches.
The overall consideration for the Acquisition is £2.0 million to be satisfied in cash from existing cash reserves. The Acquisition will be earnings accretive in 2020.
Lovelles, a third-generation family property business dating back to 1932, adopted a franchising business model in 2006 as a means of driving growth. Based on performance in the year to July 2019 Lovelles was the largest agency in its region delivering 1,425 completed sales transactions and managing 1,600 properties and was named the 'Yorkshire and Humber Agency of the Year' at the recent Negotiator Awards.
The acquired business and assets (the "Acquired Business" or "Acquisition") comprises a network of 19 estate agencies, with eleven branches offering property sales only, two offering lettings only and six offering both sales and lettings. Twelve of the branches are franchised with a further three scheduled to be franchised to the branch manager by April 2020. All of the 36 staff employed within the six corporate-owned branches and the business development manager will be transferring to Newton Fallowell Limited.
The Lovelles network is centred around Grimsby and extends north to Hull, east to Skegness and south to Lincoln, where it meets the Newton Fallowell network. Its lettings operation is mainly based in Grimsby. In line with Belvoir's multi brand strategy, Lovelles will become part of the Newton Fallowell Group, which will then operate three brands; Newton Fallowell, Goodchilds and Lovelles. The combined three networks will comprise 55 offices across the East and West Midlands and the Humber.
The key strategic driver for the Acquisition is that the Acquired Business is based on a franchise model with a strong estate agency heritage, making it a good cultural as well as a strong geographic fit for the Newton Fallowell Group. The Board anticipates the following opportunities arising from the Acquisition:
· Franchise three of the corporate-owned offices by April 2020 in line with current arrangements
· Franchise the remaining corporate-owned offices as soon as practicable
· Introduce lettings to the sales-only franchise offices, whilst extending the existing sales-focused franchise support system to include lettings
· Enhance the legal, compliance, marketing, IT and general support to franchisees through the Belvoir central franchise support system
· Improve the financial services offering through Brook Financial Services, another Belvoir Group subsidiary
· Offer the opportunity for accelerated growth under Belvoir's Assisted Acquisitions programme
In the year to 31 March 2019 the Acquired Business made an operating profit of £500,000 and at that date had net assets of approximately £100,000.
The legal form of the Acquisition is split into the acquisitions of specified parts of two separate legal entities Lovelle Estate Agencies Ltd ("LEA Ltd") and Lovelle Bacons LLP ("LB LLP") which are under the common ownership of the vendors. Completion is expected to take place on 6 January 2020 in respect of LEA Ltd and on 20 January 2020 in respect of LB LLP. LB LLP will continue to operate its surveying and commercial arms.
Trading in the second half of the financial year to date continues to be strong, and the Board is confident that the Group is in line to comfortably achieve market expectations for the full year.
Dorian Gonsalves, CEO of Belvoir, commented:
"Lovelles offers the Belvoir Group the opportunity to expand its franchise network significantly by a further 19 offices operating under a highly regarded regional brand. I would like to pay tribute to Jonathan Lovelle who is well respected within the property sector and has built Lovelles into a highly successful franchise network. We believe that as part of the Belvoir Group, we can strengthen further the offering to the Lovelles network through our experienced and professional franchise support team."
Jonathan Lovelle, MD of Lovelles, commented:
"Having seen how the Newton Fallowell network has flourished as part of the Belvoir Group, I knew that Belvoir would be the right home for the Lovelles network. Belvoir shares my vision of franchising as being the optimum business model for our industry and I know that its management team is committed to supporting the growth aspirations of all franchisees. I am proud of what our franchisees have achieved and of the strong reputation that Lovelles has within the Lincolnshire and Humber region. I look forward to seeing the network go from strength to strength as part of the Belvoir Group."
For further details:
Belvoir Group PLC
Dorian Gonsalves, Chief Executive Officer
Louise George, Chief Financial Officer
Julian Blunt, Teddy Whiley (Corporate Finance)
Tim Redfern (ECM)
+44 (0) 20 7220 0500
Charles Ryland, Victoria Hayns & Tilly Abraham
+44 (0) 20 7466 5000
About Belvoir Group PLC
Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a nationwide property franchise group with 372 offices across four brands specialising in residential lettings, property management, residential sales and property-related financial services. With its Central Office in Grantham, Lincolnshire, the Group manages over 64,650 properties and reported record revenues of £13.7m in 2018 making Belvoir the largest property franchise group in the UK.
For further information, please visit: www.belvoirgroup.com
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