Acquisition & Trading Update
27 November 2018
The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
BELVOIR LETTINGS PLC
(the "Company", "the Group" or "Belvoir")
Acquisition of MAB (Gloucester) Limited
Update on Trading
Belvoir Lettings plc (AIM: BLV), the UK's largest property franchise, is pleased to announce that in line with its continued growth strategy, it has acquired the entire issued share capital of MAB (Gloucester) Limited ("MAB Glos") for net consideration of £3.6 million (the "Acquisition"), through its subsidiary Brook Financial Services Ltd ("Brook"). The consideration will be satisfied in cash from a drawdown of existing bank facilities. The Acquisition is expected to be immediately earnings accretive.
Background on MAB Glos
MAB Glos, which trades as Mortgage Advice Bureau, is the largest1 appointed representative firm of Mortgage Advice Bureau, the wholly owned subsidiary of AIM-listed Mortgage Advice Bureau (Holdings) plc ("MAB"), one of the UK's leading networks for mortgage intermediaries.
MAB Glos provides mortgage and related financial services to clients through its network of 63 Business Partners, who, similar to a franchise network, are highly motivated individuals or small businesses operating on a self-employed basis licensed to MAB Glos with MAB providing training, support, compliance, website and national marketing via the wider MAB brand. There are 88 mortgage advisers operating across the MAB Glos network which is currently based primarily in the Midlands, the South West and Wales.
Further details of the Acquisition
Brook has acquired the entire issued share capital of MAB Glos for net consideration of £3.6 million, to be settled in cash which will be paid by drawing down existing debt facilities. Michelle Brook, Managing Director of Brook, will manage the whole financial services division overseen by Mark Newton, Executive Director of the Belvoir Lettings plc board. The Financial Services Director, Tim Wood, and all four Business Development Managers are staying within the MAB Glos business.
Financial information on MAB Glos
For the year ended 31 December 2017, based on unaudited financial statements, MAB Glos generated revenue of £3,061,000 and profit before tax of £467,000. In the 12 months to 31 August 2018, based on unaudited management accounts, MAB Glos generated revenue of £3,870,000 and profit before tax of £575,000. Within the past three years, the number of mortgage advisers within the MAB Glos network has grown from 32 to 88, of which 22 have joined in 2018. As these new 2018 advisers gain traction, the network is expected to deliver further financial growth in the remainder of 2018 and into 2019.
The Belvoir Group currently comprises 300 property franchise offices nationwide, managing over 61,000 properties and undertaking over 6,000 property sales per year; and 39 mortgage advisers within Brook offering mainly remote/telephone mortgage advice.
Between MAB Glos and Brook, acquired July 2017, the financial services division will comprise 127 mortgage advisers, which represents over 10% of the 1,100 MAB adviser base, operating out of 64 offices. Building further on this longstanding and well established relationship, the Belvoir Group has executed a new, long term exclusive agreement with MAB. The Board believes that growth for the Group will be enhanced through a close working partnership between the MAB Glos mortgage advisers and the property franchisees within the Belvoir Group in two ways:
· the ongoing recruitment of mortgage advisers to achieve nationwide coverage to be accelerated through our property franchisees offering a lead source to incoming advisers who, depending on the level of business, can be based in their office or shared between a number of adjacent offices; and
· our proposition to clients being enhanced by giving them access to thousands of mortgage deals through access to either remote/telephone or face to face high quality mortgage advice, which importantly, will continue throughout the lifetime of the relationship with the client and not just when their mortgage completes.
The Board believes that this dual approach should achieve materially greater penetration of financial services into Belvoir's client base, whilst delivering a win-win for the MAB Glos Business Partners who will continue to benefit from the support of their existing team but also gain from the Belvoir Group providing a lead source from 300 new introducers.
Following the strong growth reported in the interim results in September, the Board is pleased to report that trading has continued well and is in line with market expectations. As in previous years, a more detailed pre-close trading update for the year ended 31 December 2018 will be provided at the end of January.
Dorian Gonsalves, Chief Executive Officer, Belvoir commented:
"We are delighted to announce the acquisition of MAB Glos, whose network of 63 Business Partners will entirely complement our existing network of 300 property franchisees, both in terms of the management infrastructure and the cross-selling opportunities, creating a total of 364 offices, including Brook, operating under the Belvoir Group. We believe that the acquisition of MAB Glos will provide the basis for developing a network of financial advisers to support our franchisees at a local level, in addition to the existing mortgage advice services delivered centrally by Brook. This will give our existing property franchisees the ability to 'build a business within a business' by either utilising an existing MAB Glos mortgage adviser or taking on their own new adviser on-site. This will in turn achieve greater penetration of financial services to the Group's client base for the benefit of both individual franchisees and the Group as a whole."
For further details:
Belvoir Lettings PLC
Mike Goddard, Chairman
Dorian Gonsalves, Chief Executive Officer
Louise George, Chief Financial Officer
Cantor Fitzgerald Europe
Rick Thompson, Philip Davies, Will Goode
Caspar Shand-Kydd, Gregor Paterson
0207 894 7000
Charles Ryland, Madeleine Seacombe, Tilly Abraham
0207 466 5000
Note to Editors:
About Belvoir Lettings PLC
Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a nationwide property franchise group with 364 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 61,000 properties and reported revenue of £11.3m in 2017 making Belvoir the largest property franchise group in the UK.
1 MAB Glos is the largest appointed representative firm of Mortgage Advice Bureau in terms of number of advisers.
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Quick facts: Belvoir Group PLC
Market Cap: £34.41 m
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