The overall April performance for the group was significantly stronger than had been anticipated.
(LON:BLVR), the property lettings specialist, said its franchise networks has proved resilient during the UK’s coronavirus (COVID-19) lock-down.
Trading during the first quarter, which incorporated just one week of the lock-down period, was strong and in line with management expectations, Belvoir said in an AGM trading update.
Things got a bit trickier in April but at the end of the month the group carried out a rent arrears survey and the situation was not as bad as the board had feared. Less than 5% of tenants were in arrears on their rent compared with the usual 2% experienced by Belvoir’s networks.
During the month, the estate agency arm of the business completed on around a third of its usual transaction levels, drawing from the pipeline of house sales agreed prior to the lock-down.
The financial services division demonstrated similar resilience amongst the group’s financial advisers, who have drawn on their extensive client base for remortgages and income and life protection sales to deliver income levels in April on a par with 2019. As a result, the overall April performance for the group was significantly stronger than had been anticipated.
On May 13, restrictions on the housing sector were lifted and so the group’s franchisees were able to resume operating from their offices and to carry out physical appraisals and viewings.
Feedback to date suggests that the pipeline of agreed house sales has held up well and that there is a pent-up demand from tenants looking to move.
The group said it has been able to continue to generate cash from operations with net debt at May 20, 2020, standing at £6.9mln, unchanged from the position at the end of 2019, despite the company deploying £2.0mln of cash in January to acquire the Lovelle network and making a deferred payment of £500,000 relating to value-added tax.
“Having reported significant growth in 2019 and got off to a good start in Q1 2020, it has been hugely frustrating for the group not to have been able to build further on this momentum due to COVID-19; however, the current climate has proved once again just how robust and resilient our franchise business model is,” declared Dorian Gonsalves, the chief executive officer of Belvoir in the statement.
“Clearly time will tell as to the lasting impact of the current environment on the wider economy and on the UK housing sector more specifically; however, as a group, Belvoir benefits from a high degree of recurring revenue with 61% of gross profit derived from lettings and just 16% dependent on estate agency. Meanwhile, our financial services division has a substantial client base to which we sell a wide variety of financial products, with no excessive dependency on new mortgage sales alone,” he added.
Shares in Belvoir were…