The government's attempts to boost home ownership "won't affect the rental market whatsoever", says Mike Goddard, founder of property agent Belvoir Lettings (BLV). The company is focused purely on providing a letting and management service to landlords, so the ongoing growth of the private rented sector is key to its ambitious expansion plans.
Belvoir raised £6.2m with its Aim flotation last year - funds it is using to extend its network. It increased the outlet count from 142 to 149 last year, all but four of which are franchised. Mr Goddard is committed to this model, but says Belvoir will use its own balance sheet to take over branches in key areas where it cannot find a suitable franchisee. It acquired agents in Pimlico, Lichfield and Burton last year.
Helped by the new openings, owned outlets contributed about half the revenue growth over the period. A little less than a fifth came from new franchisees and - crucially - the rest was from 10 per cent growth in fee income from existing franchisees. Belvoir charges its agents a flat rate of 12 per cent of turnover for the use of its brand and franchise service, generating a highly attractive recurring revenue stream. Costs grew even faster than revenues last year - from £1.5m to £2.1m even before flotation costs - but Mr Goddard says that largely reflects a one-off hiring spree to support the accelerated growth strategy.
Broker Cantor Fitzgerald expects adjusted EPS of 8.9p and dividends of 6.8p this year.
BELVOIR LETTINGS (BLV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 137p | MARKET VALUE: | £28.4m | |
| TOUCH: | 133-140p | 12-MONTH HIGH: | 140p | 79p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 11p* | NET CASH: | £0.59m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 3.38 | 0.93 | na | na |
| 2009 | 3.03 | 1.21 | na | na |
| 2010 | 3.26 | 1.56 | na | na |
| 2011 | 3.35 | 1.35 | 8.1 | na |
| 2012 | 4.05 | 1.39 | 6.3 | 5.80 |
| % change | +21 | +3 | -22 | - |
Ex-div: 03 Apr Payment: 19 Apr *Including intangible assets of £0.86m, or 4p a share | ||||
