MartinCo PLC Trading Update (8144V)
February 02 2017 - 2:00AM
UK Regulatory
TIDMMCO
RNS Number : 8144V
MartinCo PLC
02 February 2017
MARTINCO PLC
("MartinCo", the "Company" or the "Group")
Trading Update for Financial Year Ended 31 December 2016
MartinCo Plc, one of the UK's largest property franchises, today
issues the following trading update for the year ended 31 December
2016, ahead of reporting its final results for the 12 month period
on 5 April 2017.
Highlights:
-- Revenue increased by 15% to GBP8.2m* (2015: GBP7.1m)
-- Expanding UK wide footprint - now trading from 377 offices (2015: 287)
-- 16 new franchisees recruited for both the resale of existing franchises and start-ups
-- Serving c.48,000 tenanted managed properties (2015: c.45,000)
-- Acquisition of EweMove in September 2016 with 96 franchisees at the year-end
-- Group remains heavily weighted towards lettings, which
account for 74% of Management Service Fees (2015: 76%)
-- Strong balance sheet with a cash position of GBP2.0m* (2015: GBP4.3m)
-- Current trading in line with expectations
* Unaudited
Trading performance in the final months of 2016 has been robust,
despite challenging market conditions during the immediate
aftermath of the Brexit vote. This performance has been driven by
organic growth in Management Services Fees, an expanding network of
franchisees and tight cost control measures. EweMove made a modest
contribution to Group EBITDA with 96 franchisees at the year
end.
In September 2016, MartinCo acquired EweMove, a "hybrid" estate
agency and letting agency model using an online platform and modern
digital marketing techniques. It offers franchisees a low cost
model as there is no requirement for commercial premises or staff.
It is currently targeting experienced estate agents and business
proprietors as potential franchise recruits to rapidly expand its
network footprint in 2017.The Group is also importing some of the
intellectual capital of EweMove into its five traditional high
street brands, and will be launching new websites with a facility
for customers to book valuation appointments in real time. EweMove
is the No.1 Estate Agent and the No. 1 Letting Agent on
Trustpilot.
The Group maintains a strong balance sheet with cash reserves of
approximately GBP2.0m. During the period the Group used GBP3m of
cash to partly fund the initial consideration paid for EweMove of
GBP8m. The Group remains highly cash generative and with unused
loan facilities of GBP1.6m it remains in a strong financial
position at the period end. The Board reaffirms its commitment to a
progressive Dividend policy with the next dividend expected to be
declared in May 2017.
Outlook
The fundamental drivers for expansion of the UK private rented
sector remain in place: high net migration, a restricted supply of
new housing stock with affordability and deposit hurdles for first
time buyers and pension reform in early 2015 which unlocked pension
funds for over-55 year olds. Total returns from Buy-To-Let
investment over the past decade have outperformed most other asset
classes and the prospect of owning a privately rented property to
generate income in retirement and benefit from rising capital
values remains attractive.
There is no timetable for implementation of the Government's
proposal to ban or restrict the charging of fees to tenants in
England. A total tenant fee ban in Scotland, in 2012 was
successfully overcome by the Group, winning market share at the
expense of smaller, less financially stable letting businesses,
many of whom withdrew from the market.
Commenting on Group performance, MartinCo Chief Executive
Officer, Ian Wilson, said:
"We do not envisage the Government's recent interventions in the
buy-to-let sector significantly impacting our business. Buy-to-let
investors have generally reduced gearing in their portfolios over
the years since 2008 and are believed to be able to absorb rising
interest rates. We are well positioned to sell investment
properties if investors decide to exit, and our research suggests
that larger buy-to-let investors would purchase this stock. Early
indications from the mortgage industry show that investors are
beginning to incorporate their activities into trading companies to
avoid the stamp duty surcharge and to retain the benefit of
interest tax relief on buy-to-let loans.
We have a clear brand strategy as we enter 2017. Martin & Co
is our national lettings brand, and has appeal to landlords
letting, buying and selling investment properties. Ellis & Co,
Parkers, CJ Hole & Whitegates are strong regional brands and
have particular expertise in estate agency services. Collectively
these are our "traditional" brands and operate from high street
premises.
The acquisition of EweMove marked an important milestone for the
Group and means we now have a national estate agency "challenger"
brand. It's deliberately designed to be "non-traditional" and has
its own distinctive culture built around exemplary customer
service.
We remain positive about the outlook for our core lettings
business, from which 74% of our franchise royalty income is
derived. I look forward to providing a further update at our full
year results in April."
-Ends-
The information contained 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.
For further information, please contact:
MartinCo Plc
Ian Wilson, Chief Executive Officer
David Raggett, Chief Financial Officer 01202 292829
Cenkos Securities plc
Max Hartley (Nomad)
Alex Aylen (Sales) 0207 397 8925
Bell Pottinger 020 3772
David Rydell, Henry Lerwill 2500
About MartinCo
MartinCo Group operates one of the UK's largest property
franchise businesses through its 377 offices and 6 franchise brands
Martin & Co, CJ Hole, Parkers, Ellis & Co, Whitegates and
EweMove.
The Group's franchisees manage approximately 48,000 properties
on behalf of private clients. The Group added an estate agency
service in 2013 and offers this service at 370 of its offices.
MartinCo is a multiple award winning business and the Directors
and senior management have over 100 years of combined residential
letting and estate agency experience.
www.martinco.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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