TIDMBLV
RNS Number : 7933P
Belvoir Lettings PLC
05 September 2017
For Immediate Release 5 September 2017
BELVOIR!
BELVOIR LETTINGS PLC
(the "Company" or "Belvoir")
Interim Results for the six months ended 30 June 2017
Belvoir Lettings PLC (AIM: BLV), the UK's largest property
franchise, is pleased to announce interim results for the six
months ended 30 June 2017.
Financial Highlights
-- Group revenue up 15% to GBP4,921,000 (H1 2016: GBP4,293,000)
-- 47% increase in Management Service Fees (MSF) to GBP3,796,000 (H1 2016: GBP2,580,000)
-- 62% increase in profit before tax to GBP1,731,000 (H1 2016: GBP1,071,000)
-- H1 results reflect full six months period beneficial impact
of Northwood acquired on 7 June 2016 and the franchising out of six
corporate offices since 30 June 2016
-- Basic earnings per share of 4.1p (2016: 2.6p) and adjusted
earnings per share of 5.0p (H1 2016: 3.5p)
-- Interim dividend of 3.4p, consistent with prior year with
dividend cover now at 1.2 (H1 2016: 0.7)
Operational Highlights
-- Seven new franchise owners joining the Group into two new and five existing territories
-- Twelve franchisee-led acquisitions adding GBP1,732,000 of
network revenue and GBP188,000 recurring MSF income
-- Lettings to sales ratio of 81:19 (H1 2016: 73:27) reflects lettings bias of Northwood
-- Number of offices nationwide of 300 (H1 2016: 306) across four networks
-- Acquisition of Brook Financial Services Ltd (Brook) on 12
July 2017 to provide mortgage, insurance and other financial
services to the Group
Dorian Gonsalves, Chief Executive Officer of Belvoir Lettings,
commenting on the results, said:
"The Group has been focused on meeting our franchisees
entrepreneurial growth ambitions and putting them in the very best
possible position to maximise their market share within their
territory. Our franchisees have embraced the opportunity to develop
their business under our Assisted Acquisitions programme, many of
them doubling the size of their business overnight, and from
offering additional services such as property sales and financial
services. The acquisition of Brook in July will provide further
opportunity for growth at both the franchisee and franchisor
level.
"In H1 the Group achieved organic growth from MSF, our key
revenue stream, of 4% which is higher than the reported rental
index within the sector, and continued growth from property sales,
in a market that has seen some mixed results from other companies
in the sector.
"Our ability to outperform the market has helped to deliver a
strong set of first half results, and with a promising start to the
second half, Belvoir is on track to meet management expectations
for the year."
For further details:
Belvoir Lettings PLC 01476 584900
Mike Goddard, Chairman investorrelations@belvoirlettings.com
Dorian Gonsalves, Chief Executive
Officer
Louise George, Chief Financial
Officer
Cantor Fitzgerald Europe
Rick Thompson, Phil Davies,
Will Goode
Corporate Finance 0207 894 7000
Mark Westcott, Caspar Shand-Kydd
Sales
Buchanan
Charles Ryland, Vicky Hayns,
Madeleine Seacombe 0207 466 5000
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.
About Belvoir Lettings PLC
Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir
operates a nationwide property franchise group with 300 offices
across four brands offering a range of specialist services in
property rental, property management, residential lettings, buy to
let and property sales. With its Central Office in Grantham,
Lincolnshire, the Group manages over 57,000 properties and reported
revenue of GBP9.9m in 2016 making Belvoir the largest property
franchise group in the UK.
Belvoir's core revenue is derived from Management Service Fees
(MSF); a reliable recurring revenue model through which the Group
offers franchisees significant support and advice.
In 2015 Belvoir launched its multi-brand franchising strategy
and now owns Newton Fallowell Limited in the East Midlands,
Goodchilds Estate Agents and Lettings Limited in the West Midlands
and Northwood GB Limited, a nationwide network. In total, the Group
operates from 300 territories within the UK. In July 2017, the
Group acquired Brook Financial Services Ltd, a mortgage broker and
financial service provider.
The Company remains committed to diversifying its brand
portfolio, utilising the Group's strong franchising expertise and
infrastructure, in order to capitalise on a consolidating
market.
Chief Executive's Report
It gives me great pleasure to report on the Group's interim
results for the six months ended 30 June 2017.
Overview
The first six months of 2017 has seen further strategic progress
driving profitable growth across the Belvoir Group. The emphasis
has been on supporting our franchisees to strengthen their
businesses in response to anticipated changes within the sector
including the Government's intention to ban tenant fees. Our
franchisees have responded positively with a further 17 Belvoir
franchisees taking up property sales as part of their service
offering, three Newton Fallowell sales-only franchisees embarking
on a lettings service and twelve franchisees across the Group
completing on local portfolio acquisitions under our Assisted
Acquisitions programme.
Income from management service fees (MSF), our core revenue
stream, increased by 47%. Whilst 40% reflects the full six month
inclusion of Northwood acquired on 7 June 2016, the organic growth
achieved at 4% exceeds the Belvoir Q2 rental index of 2.75% and
demonstrates the Group's ability to outperform the market. In
addition MSF was boosted by a further 3% due to the continued roll
out of property sales by the lettings dominant Belvoir and
Northwood networks and from the increased network revenue arising
on the franchise-led portfolio acquisitions.
Market
Both the sales and the lettings markets being subject to
challenging conditions. A shortage of housing stock available for
sale has reduced activity in the sales market and the changes to
the tax regime and stamp duty for buy to let landlords and the
impending ban on tenant fees has caused some uncertainty in the
lettings market. Notwithstanding the market conditions, Belvoir
continues to perform well on both fronts.
Lettings and portfolio acquisitions
The beneficial impact of the Northwood acquisition is evident in
the increased bias towards lettings with the lettings to sales
ratio now at 81:19 (H1 2016: 73:27). The Board still sees lettings
as a reliable and growing recurring revenue stream. In the first
half of 2017, we proactively engaged with franchisees through a
series of roadshows to outline how the Belvoir Central Office team
could support franchisees to take advantage of consolidation within
the sector by acquiring local lettings portfolios. In the year to
date, twelve of our franchisees have benefitted from the Assisted
Acquisitions programme increasing network revenue by GBP1,732,000
at a total deal cost of GBP2,117,000, of which GBP322,000 was
funded by a Central Office loan. Together, these acquisitions will
increase MSF by GBP188,000 in a full year and GBP83,000 in the
current financial year.
As a result of organic growth and growth from portfolio
acquisitions, the number of properties now managed by the Group
increased by 6.7% to 57,637 (H1 2016: 54,000).
Property sales and financial services
In a market that saw mixed results for many established estate
agents, Belvoir enjoys a clear upward trend in MSF from property
sales with most of our Belvoir, Northwood and Goodchilds
franchisees seeing sales as an opportunity to offer additional
services, and our established estate agent Newton Fallowell
continuing to dominate the market in which it operates. In order to
maximise revenue from property sales, Belvoir acquired Brook
Financial Services Ltd, a provider of mortgage and related
financial services, in July 2017. Brook is able to deliver a more
focused approach enabling materially greater penetration of
Belvoir's client base which is expected to increase the financial
services fees generated on property sales across all Group
networks. The Group recognises the need to adapt to changes in the
sector and is currently working towards an online self-service
estate agency platform to be offered alongside our traditional
estate agency service.
Strategic growth
Belvoir's strategy has always been to put its franchisees at the
heart of its growth plans with the focus on supporting each and
every franchisee to achieve their potential, supported by a
professional and effective Central Office team. Since 2014 over 30
franchise owners have been supported by Belvoir in making a local
portfolio acquisition, in many cases, as much as doubling the size
of their business overnight. We have further such deals currently
with lawyers and other opportunities under review which are
expected to deliver similar growth in the second half of the year.
Meanwhile the Group has demonstrated its capability to operate on a
multi-brand basis leveraging its deep understanding of franchising
and considerable experience of the property sector. The Board
continues to evaluate opportunities for further significant
consolidation within the sector at a larger scale.
Staff
I would like to take this opportunity to thank Mike Goddard for
his remarkable stewardship of the Belvoir Group since he founded it
in 1995, and in particular for his strategic vision over the past
three years which has resulted in the Group more than doubling. In
his ongoing role as Chairman, Mike will continue to provide that
strategic input that has ensured Belvoir has been such a success. I
am also grateful to Mike and my fellow Board members for their
confidence in appointing me to lead the Group as its Chief
Executive. As a team we have demonstrated how to build a Group
based on the core principles of professionalism, excellent customer
service and strong business ethics. In my new role as Chief
Executive, I look forward to working with the Board and our team of
staff, whose commitment and enthusiasm is much appreciated, to
drive the Group forward.
Dividend
It is the current policy of the Board to gradually increase
dividend cover and we are therefore recommending an unchanged
dividend of 3.4p per share for the half year. This will be reviewed
again at the end of the year.
Outlook
Having reported strong results in the first half of 2017,
demonstrating clear strategic progress for the Group, I am pleased
to further report that with a promising start to the second half of
the year, Belvoir is making good progress and current year trading
is in line with market expectations.
Belvoir will continue to provide a high quality support system
to its franchisees including the provision of the necessary
technology tools to enable them to adapt to a changing environment.
Belvoir is well placed to take advantage of further consolidation
in the property market for its franchise owners, and for the Group
itself to continue to lead the overall property franchise market,
by capitalising on its expertise as a franchisor.
Dorian Gonsalves
Chief Executive Officer
Financial Review
Revenue
Group revenue for the six months ended 30 June 2017 increased by
15% to GBP4,921,000 (H1 2016: GBP4,293,000) reflecting an increment
of GBP1,134,000 from a full six months of trading of Northwood,
acquired 7 June 2016, and a reduction of GBP541,000 following the
franchising out of six corporate offices since June 2016.
MSF increased by 47% to GBP3,796,000 (H1 2016: GBP2,580,000)
reflecting growth of 40% from the full period inclusion of
Northwood, 4% from organic growth, 1.6% from growth in estate
agency and 1.4% from franchisee-led acquisitions under the Belvoir
Assisted Acquisitions programme.
Corporate offices contributed reduced revenue of GBP687,000 (H1
2016: GBP1,228,000) in line with the Group's strategy of building a
pure franchise model. In the second half of 2016 four corporate
offices were sold to franchisees and in the first quarter of 2017
the Devizes office was sold to a new Belvoir franchise owner and
the Burton office as a second territory to an existing Belvoir
franchise owner. In April, the Central Office team stepped in to
caretake the Yardley and Solihull offices before handing over to a
new franchise owner from September. Of the remaining four corporate
offices, the two in Grantham will continue as corporate offices for
the foreseeable future, whilst a franchise solution is being sought
for the offices in Spalding and Cumbria. The reduction in revenue
from corporate offices of GBP541,000 was offset by a reduction in
operating costs of GBP570,000. Overall, corporate offices
contributed EBITDA of GBP177,000 (H1 2016: GBP148,000).
Initial franchise fees and resales commissions contributed
GBP115,000 (H1 2016: GBP163,000). During the period three new
franchise owners joined the Belvoir Group and a further four
completed their induction training in August giving a total of
seven (2016: four) new franchise owners year to date. Of these,
five have taken over an existing office and two are opening in new
territories under our Enhanced Start programme which supports an
incoming franchisee to acquire a local lettings agency to rebrand
to one of the Group's networks.
Other income which includes income from financial services was
GBP323,000 (H1 2016: GBP322,000). Following the acquisition of
Brook in July 2017, the revenue stream from financial services is
expected to increase going forward.
Administrative expenditure
Ongoing administrative expenses were unchanged at GBP3,154,000
(H1 2016: GBP3,148,000). The increased cost of operating Northwood
of GBP524,000 was mitigated by the reduced cost of operating the
corporate offices of GBP570,000.
In February, with the support of the Northwood senior management
team, which is operating under an earn out period until May 2018, a
restructuring of the Northwood cost base was carried out aimed at
consolidating some of the functions at a group level and
introducing some efficiencies into the operations. This gave rise
to redundancy costs of GBP22,000, which have been reported as
exceptional costs, and reduced overheads of GBP250,000 p.a. going
forward.
Exceptional costs of GBP193,000 in H1 2016 relate to the
acquisition of Northwood.
Deemed interest of GBP68,000 (H1 2016: nil) arose from the
deferred consideration on Northwood.
Profit before taxation
Profit before taxation for the period was up 62% to GBP1,731,000
(H1 2016: GBP1,071,000) with adjusted profit before taxation up 52%
to GBP2,062,000 (H1 2016: GBP1,354,000) before exceptional costs
and amortisation of acquired intangibles.
Taxation
The effective rate of corporation tax for the period was 19.25%
(H1 2016: 23.5%).
Profit after taxation
Profit after taxation for the period was up 71% to GBP1,398,000
(H1 2016: GBP818,000) with adjusted profit after taxation up 55% to
GBP1,710,000 (H1 2016: GBP1,101,000).
Earnings per share
Basic earnings per share was 4.1p (H1 2016: 2.6p) based on an
average number of shares in issue in the period of 34,412,826 (H1
2016: 31,061,678). As adjusted for exceptional costs and the
amortisation of acquired intangibles, the adjusted basic earnings
per share was up 43% to 5.0p (H1 2016: 3.5p).
Diluted basic earnings per share was 4.0p (H1 2016: 2.6p) and
adjusted diluted earnings per share was 4.8p (H1 2016: 3.4p) based
on an average number of shares in issue in the period of 35,351,225
(H1 2016: 32,000,077).
Dividends
In line with the Groups' policy to increase dividend cover, the
Board is proposing an unchanged interim dividend for 2017 of 3.4p
per share, payable to shareholders on 27 October 2017 based upon
the register on 15 September 2017. The ex-dividend date will be 14
September 2017. The dividend cover is now at 1.2 (H1 2016:
0.7).
Cash flow
On an operational level, the Group is highly cash generative
with net cash inflow from operations at GBP1,908,000 (H1 2016:
GBP1,192,000) reflecting the enlarged Group. During the period
there was a net inflow from the franchisee loan book of GBP268,000
(H1 2016: GBP99,000).
On 23 January 2017 the Company issued 803,284 new ordinary
shares of one pence at a price of 116.67p each to the vendors of
Northwood GB Limited in settlement of the initial consideration due
under the terms of the acquisition. These shares are subject to a
12 month lock-in.
The other principal cash movements reported in the first half of
2016 reflected the acquisition of Northwood with the initial
consideration of GBP8,000,000 being funded by means of additional
bank lending of GBP6,000,000 and an equity fund-raise of
GBP2,570,000.
Post period acquisition
In July 2017 the Group acquired Brook Financial Services Ltd for
a total consideration of GBP2m which was satisfied by a GBP1.5
million cash payment from existing cash resources and the issue of
GBP0.5 million new ordinary shares in Belvoir to the sole
shareholder, Michelle Brook, which are subject of a three year lock
in. Michelle Brook will continue working full-time as Managing
Director of Brook.
Liquidity and capital resources
The Group had cash balances of GBP2,128,000 (H1 2016:
GBP1,251,000) and a NatWest bank loan of GBP6,797,000 (H1 2016:
GBP7,014,000). The loan is repayable GBP175,000 quarterly with a
bullet repayment of GBP4.0m in March 2021. The Bank agreed to a
repayment holiday for the June and September 2017 quarters to
facilitate the acquisition of Brook Financial Services ltd in July
2017. These payments will be caught up in December 2017 and March
2018.
Financial position
The Group continues to operate from a sound financial platform
generating sufficient cash from the operations of the enlarged
Group to meet the interest and capital payable on the loan facility
and dividends to shareholders. At the end of June 2017, the Group
was comfortably inside its bank covenants with the debt service
cover at 3.8 times. The Group maintains a franchisee loan book,
currently at GBP4.8m (H1 2016: GBP4.4m), the capital repayments of
which are used to give further financial assistance to franchisees
under the Assisted Acquisitions programme to accelerate their
growth and therein contribute towards increased Group revenue.
Louise George
Chief Financial Officer
Condensed Group Statement of Comprehensive Income
For the six months ended 30 June 2017
Notes Unaudited Unaudited Audited
Six Six Year
months months ended
ended ended 31 December
30 June 30 2016
2017 June
2016
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 2 4,921 4,293 9,940
---------- ---------- -------------
Administrative expenses
Non exceptional (3,154) (3,148) (6,948)
Exceptional (22) (193) (482)
---------- ---------- -------------
(3,176) (3,341) (7,430)
Operating profit 1,745 952 2,510
Loss on disposal of corporate
outlets - - (160)
Finance costs (104) (32) (139)
Finance income 158 151 291
Exceptional deemed interest
on contingent consideration (68) - (93)
Profit before taxation 1,731 1,071 2,409
Taxation 4 (332) (253) (576)
---------- ---------- -------------
Profit and total comprehensive
income for the financial period 1,399 818 1,833
Profit for the period attributable
to the equity holders of the parent
company 1,399 818 1,833
---------- ---------- -------------
Basic earnings per share from
continuing operations 5 4.1p 2.6p 5.7p
Adjusted basic earnings per
share from continuing operations 5 5.0p 3.5p 7.7p
Adjusted diluted earnings per
share from continuing operations 5 4.9p 3.4p 7.4p
---------- ---------- -------------
Consolidated Statement of Financial Position
As at 30 June 2017
Unaudited Unaudited Audited
At At At
30 30 31 December
June June 2016
2017 2016
GBP'000 GBP'000 GBP'000
---------- ---------- -------------
Assets
Non-current assets
========== ========== =============
Intangible assets 24,523 27,904 24,772
Property, plant and
equipment 641 793 657
Trade and other receivables 4,800 4,403 4,024
========== ========== =============
29,964 33,100 29,453
========== ========== =============
Current assets
========== ========== =============
Trade and other receivables 1,704 1,911 2,740
Cash and cash equivalents 2,128 1,251 1,591
========== ========== =============
3,832 3,162 4,331
---------- ---------- -------------
Total assets 33,796 36,262 33,784
Liabilities
Non current liabilities
========== ========== =============
Interest bearing
loans and borrowings 6,097 6,639 6,270
Deferred consideration 4,281 6,121 4,281
Deferred tax 2,024 2,472 2,054
========== ========== =============
12,402 15,232 12,605
Current liabilities
========== ========== =============
Trade and other payables 1,713 1,635 1,239
Interest bearing
loans and borrowings 700 375 692
Deferred consideration - 1,254 1,068
Tax payable 473 322 849
========== ========== =============
2,886 3,586 3,848
---------- ---------- -------------
Total liabilities 15,288 18,818 16,453
---------- ---------- -------------
Total net assets 18,508 17,444 17,331
---------- ---------- -------------
Equity
Shareholders' equity
========== ========== =============
Share capital 344 336 336
Share premium 11,511 10,583 10,583
Share based payment
reserve 89 60 76
Other components
of equity 162 162 162
Merger reserve (5,774) (5,774) (5,774)
Retained earnings 12,176 12,077 11,948
========== ========== =============
Total equity 18,508 17,444 17,331
========== ========== =============
Consolidated Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2017
Share Share Share Merger Other Retained Total
capital premium based reserve components earnings equity
payment of equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- --------- ------------ ---------- --------
Balance at 1 January
2016 (Audited) 305 7,379 51 (5,774) 162 12,298 14,421
Issue of equity
share capital 31 3,204 - - - - 3,235
Share based payments - - 9 - - - 9
Dividends - - - - - (1,039) (1,039)
Transactions with
owners 31 3,204 9 - - (1,039) 2,205
Profit and total
comprehensive income
for the six month
period - - - - - 818 818
Balance at 30 June
2016 (Unaudited) 336 10,583 60 (5,774) 162 12,077 17,444
Share based payments - - 16 - - - 16
Dividends - - - - - (1,144) (1,144)
--------- --------- --------- --------- ------------ ---------- --------
Transactions with
owners - - 16 - - (1,144) (1,128)
Profit and total
comprehensive income
for the six month
period - - - - - 1,015 1,015
========= ========= ========= ========= ============ ========== ========
Balance at 31 December
2016 (Audited) 336 10,583 76 (5,774) 162 11,948 17,331
========= ========= ========= ========= ============ ========== ========
Issue of equity
share capital 8 928 - - - - 936
Share based payments - - 13 - - - 13
Dividends - - - - - (1,171) (1,171)
--------- --------- --------- --------- ------------ ---------- --------
Transactions with
owners 8 928 13 - - (1,171) (222)
Profit and total
comprehensive income
for the six month
period - - - - - 1,399 1,399
--------- --------- --------- --------- ------------ ---------- --------
Balance at 30 June
2017(Unaudited) 344 11,511 89 (5,774) 162 12,176 18,508
--------- --------- --------- --------- ------------ ---------- --------
Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
Notes Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
---------- ---------- -------------
Operating activities
========== ========== =============
Cash generated from operating
activities 6 1,908 1,192 2,946
Tax paid (250) (305) (597)
========== ========== =============
1,658 887 2,349
Investing activities
========== ========== =============
Capital expenditure on
property, plant and equipment (30) (66) (80)
Corporate network acquisitions 7 - (8,000) (8,005)
Settlement of deferred
consideration (988) (1,901) (2,202)
Corporate office acquisitions - (31) -
Working capital and cash
introduced by companies
acquired - 232 243
Disposals of assets 71 7 797
Franchisee loans granted (75) (419) (1,352)
Loans repaid by franchisees 343 518 938
Finance income 153 151 291
========== ========== =============
Net cash (used in) / from
investing activities (526) (9,509) (9,370)
Financing activities
========== ========== =============
Finance costs (185) (68) (185)
Funds advanced - 7,000 7000
Loan repayments in the
period (175) (1,000) (1,000)
Proceeds from share issue 936 2,570 2,570
Share placing costs - (269) (269)
Equity dividends paid (1,171) (1,039) (2,183)
========== ========== =============
Net cash from / (used in)
financing activities (595) 7,194 5,933
---------- ---------- -------------
Net change in cash and
cash equivalents 537 (1,428) (1,088)
Cash and cash equivalents
at the beginning of the
financial period 1,591 2,679 2,679
---------- ---------- -------------
Cash and cash equivalents
at the end of the period 2,128 1,251 1,591
---------- ---------- -------------
Notes to the Interim Financial Statements
1 General information and basis of preparation
The financial information set out in these condensed
consolidated interim financial statements for the six months ended
30 June 2017 and the comparative figures are unaudited.
They have been prepared taking into account the requirements of
relevant accounting standards and the AIM rules. They do not
constitute statutory accounts within the meaning of Section 434(3)
of the Companies Act and do not contain all the information
required for full annual financial statements.
The statutory audited accounts for the year ended 31 December
2016 have been delivered to the Registrar of Companies in England
and Wales. The Auditor's report on these accounts was unqualified
and did not contain statements under Section 498 of the Companies
Act 2006.
The condensed consolidated interim financial statements are
presented in sterling, which is also the functional currency of the
parent company.
Belvoir Lettings PLC is the group's ultimate parent company. The
company is a Public Limited Company incorporated and domiciled in
the United Kingdom.
The Group's registered office and principal place of business is
The Old Courthouse, 60a London Road, Grantham, Lincolnshire, NG31
6HR. Its shares are listed on the AIM market of the London Stock
Exchange.
The condensed interim financial statements for Belvoir Lettings
PLC have been approved for issue by the Board of Directors on 4
September 2017.
Significant accounting policies
The condensed consolidated interim financial statements have
been prepared under the historical cost convention. Being listed on
the AIM of the London Stock Exchange, the company is required to
present its consolidated financial statements in accordance with
International Financial Reporting Standards ("IFRS's") as adopted
by the European Union and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
The accounting policies have been applied consistently
throughout the group for the purposes of preparation of these
condensed consolidated interim financial statements.
Revenue recognition
Revenue represents income from management service fees (MSF),
fees from the sale of franchise licences (initial franchise fees),
commission on resales of franchised outlets, provision of training,
and ongoing support of the franchisees.
MSF are invoiced to individual franchisees on a monthly basis in
relation to a percentage of their turnover for any given month.
They are recognised in the month in which the income is
receivable.
Initial franchise fees are recognised upon signing of the
contract as it is at this point that the new franchisee has a legal
obligation to make good the terms of the contract. The initial fees
are for the use of the brand along with initial training and
support and promotion during the opening phase of the new office.
As such the Group regards this as a separate initial transaction
for which it has fulfilled its obligations.
Revenue also includes fees generated by outlets operated by the
Group that are not franchises. These corporate offices invoice
landlords on a monthly basis and so recognise the income during the
period in which the work is carried out. Corporate revenue also
arises from fees on property sales which are recognised by
reference to the legal exchange date of the housing transaction as
all obligations have been fulfilled at that point.
2 Segmental information
The Executive Board, as the chief operating decision maker,
reviews financial information for and makes decisions about the
Group's overall franchising business and has identified the
operating segments to be that of property lettings franchising and
owned operated lettings and estate agency outlets. Management do
not report on a geographical basis and no customers represent
greater than 10% of total revenue in either of the periods
reported.
The segmental information is, therefore, the same as that set
out in the consolidated statement of comprehensive income. The
directors do not consider the presentation of gross profit within
the Group statement of comprehensive income to reflect a true
position of the Group's activities and core operations, which is
that of a property letting franchisor. Therefore, the directors
disclose operating profit as the key performance measure. The
reported segment is consistent with the Group's internal reporting
for performance measurement and resources allocation.
The directors believe there to be four material income streams
which are split as follows:
Lettings Property sales Total revenue
Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited
H1 H1 FY H1 H1 FY H1 H1 FY
2017 2016 2016 2017 2016 2016 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========= ========= ======== ========= ========= ======== ========= ========= ========
Management
service fees 3,238 2,142 5,405 558 438 1,026 3,796 2,580 6,431
Corporate owned
outlets 400 636 1,205 287 592 1,110 687 1,228 2,315
========= ========= ======== ========= ========= ======== ========= ========= ========
3,638 2,778 6,610 845 1,030 2,136 4,483 3,808 8,746
========= ========= ======== ========= ========= ======== ========= ========= ========
Initial
franchise fees
and resale
commissions 115 163 368
Other income 323 322 826
========= ========= ========
4,921 4,293 9,940
--------- --------- --------
3 Dividends
The company will pay an interim dividend of 3.4p pence per share
(GBP1,187,973) on 27 October 2017 to the shareholders on the
register on 16 September 2017.
4 Taxation
Taxation has been calculated by applying the forecast full year
effective rate of tax to the results for the period.
5 Earnings per share
Earnings per ordinary share have been calculated by dividing the
profit after tax for the financial period, by the weighted average
number of shares deemed to be in issue in the period under the
pooling of interests method of accounting.
Unaudited Unaudited Audited
six six Year
months months Ended
ended ended 31 December
30 June 30 June 2016
2017 2016
Profit for the financial
period (GBP'000) 1,398 818 1,833
*Adjusted profit for the
financial period (GBP'000) 1,710 1,011 2,479
Weighted average number of
ordinary shares - basic ('000) 34,413 31,062 32,376
Weighted average number of
ordinary shares - diluted
('000) 35,351 32,000 33,314
Basic earnings per share 4.1p 2.6p 5.7p
Diluted earnings per share 4.0p 2.6p 5.5p
*Adjusted basic earnings
per share 5.0p 3.5p 8.6p
*Adjusted diluted earnings
per share 4.8p 3.4p 8.3p
========== ========== =============
*Adjusted for exceptional acquisition costs and amortisation of
acquired intangibles.
6 Reconciliation of profit before taxation to cash generated
from operations
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit before taxation 1,731 1,071 2,409
Depreciation and amortisation charges 321 215 602
Finance costs 104 32 139
Finance income (158) (151) (291)
Loss on disposal of corporate outlets - - 302
Deemed interest charge 68 - 93
Adjustment to deferred consideration - - (2)
Share based payments 13 9 25
========== ========== =============
2,079 1,176 3,277
Increase in trade and other receivables (68) (628) (604)
Increase in trade and other payables (103) 644 273
---------- ---------- -------------
Cash generated from operations 1,908 1,192 2,946
---------- ---------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KZLFBDKFZBBF
(END) Dow Jones Newswires
September 05, 2017 02:00 ET (06:00 GMT)
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