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Hunters Property PLC  -  HUNT   

Interim Results

Released 07:00 06-Sep-2018

RNS Number : 9133Z
Hunters Property PLC
06 September 2018
 

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR)

 

Hunters Property PLC

 

Interim Results

 

Hunters Property Plc ("Hunters" or the "Company" or the "Group"), one of the UK's largest franchised sales and lettings agency businesses, is pleased to announce its interim results for the six months ended 30 June 2018.

 

'Robust half year results underpin confidence for full year outcome'

 

Financial Highlights:

·     Network Income up +2% to £17.9m (six months to June 2017: £17.6m);

·     Revenue £6.7m (2017: £6.7m);

·     Adjusted operating profit* up +7% to £854,000 (2017: 800,000);

·     Adjusted earnings per share 2.03p (2017: 2.09p); and

·     Interim dividend up +14% to 0.8p per share (2017: 0.7p per share).

 

Operational Highlights:

·     Opened a total of eight new branches in this period, including the conversions of six existing businesses expanding our branch network to 203 (June 2017: 206);

·     Further developed our Online capability as well as launching our revamped website;

·     Expanded our acquisition fund to network members for businesses seeking finance to acquire lettings books and or competitors and so consolidate the market;

·     Successfully completed 11 lettings book purchases since launch;

·     Grown lettings income across the network by 14% for the period; and

·     Returned a Customer Satisfaction Rating of 96% (Dec 2017: 95%).

 

Outlook

·     Board remains confident the 2nd half will, as usual, outperform the first and remains in line to exceed last year's full year performance despite completed sales for the market as a whole reporting a 9% decline;

·     Independent businesses continue to join the Hunters network to mitigate the current uncertainty and challenging backdrop; and

·     Strong net asset position and facilities available to continue our growth plans.

 

* (operating profit before depreciation, interest, amortisation and acquisition costs and share based payments)

 

Glynis Frew, Chief Executive of Hunters Property Plc, commented:

"We have delivered robust results in the six months to June 2018 against a backdrop of markets that have continued to contract in terms of completed sales transactions which HMRC reported as at June as being down 8.8%* as against the same period last year.  We are underpinned by our strategy to grow and develop the franchise network and we are bolstered by the pipeline of prospective franchisees interested in joining Hunters.  We are encouraged with the take-up from our network as looking to expand and taking advantage of our facility to do so. We are especially encouraged at the increase in strength of prospects we have registered reinforcing our view, especially in this environment, of the comparative benefits of joining the Hunters network. 

 

Our view is that the challenging market is unlikely to improve in the foreseeable future, but our intention is to continue the industry's consolidation.  The continuing work and support displayed by our staff and the franchise network is a great credit to the Group.  I offer, on behalf of the Board, our gratitude to everyone that has been involved."

 

* Source: HMRC UK Property Transactions Statistics

 

For further details:

 

Hunters Property Plc

Kevin Hollinrake, Chairman

Glynis Frew, Chief Executive Officer

Ed Jones, Chief Financial Officer

 

Tel:  01904 756 197

Dowgate Capital Stockbrokers

David Poutney and James Serjeant (Corporate Broking)

 

Tel: 020 3903 7715

 

SPARK Advisory Partners Limited

Mark Brady and Neil Baldwin (Nominated Adviser)

 

Tel: 020 3368 3551

Smithfield Consultants Limited                     

Alex Simmons

Tel: 020 7360 4900

 

Chairman's Statement

 

Overview

On behalf of the Board I am pleased to comment on robust half year results for 2018.  In this period the Group added another eight branches to the network making a total of 122 in the last four and a half years.  Network Income in the six months to June grew by 2% to £17.9m (six months to June 2017: £17.6m). The average per branch for this first six months has increased 3% to £88k (six months to June 2017: £85k) and the income balance of 66:34 sales to lettings for this period (2017: 69:31).

 

Turnover was maintained at £6.7m (2017: £6.7m) with an increase in adjusted operating profit of 7% to £854,000 (2017: £800,000).  The Group's strategy is to grow a predominantly franchise network and during this period opened eight branches (2017: nine) including six (2017: six) that were existing businesses converting to Hunters.  At the end of June, the network stood at 203 (June 2017: 206) branches, of which 192 (2017: 195) are franchised.

 

Our strategy combines leading online technologies, with particular focus on developing new ways of working which reduce labour costs, all combined with genuine local area expertise.  We continued our significant investment in technology including online booking of valuations and new customer portals, allowing customers to track their property transactions 24/7 and development of our new website and online capabilities. 

 

We continue to drive professional standards through our industry leading Hunters Training Academy, which has seen over 4,000 courses completed by the network in the first six months of this year (an increase of 70% versus 2017).  Our web users increased by 13% in the period to July against the same period last year and our customer service rating to June has increased to 96% (to December 2017: 95%), a consistently market leading performance.

 

Outlook

Given the market challenges we are delighted with our results and our strong pipeline of transactions due to move to sales revenue that give the management team confidence for H2.  Consequently, the Board is declaring an interim dividend of 0.8p (2017: 0.7p) per share, an increase of 14%.  The dividend will be paid on 19 October 2018 to shareholders on the register on 21 September 2018.

 

It is encouraging that good quality independent businesses see the benefit of joining the Hunters network as evidenced by the number and calibre of enquiries we are receiving.  We are delighted with the take up of our recently launched acquisition fund for purchases of letting portfolios by the network and we continue to look for further strategic, earnings enhancing acquisitions should they become available.

 

I look forward to updating you again in due course.

 

 

Kevin Hollinrake

Chairman

 

 

 

Financial Report

 


H1 2018

H1 2017


Network Income

£17.9m

£17.6m

+2%





Sales

£6,699,000

£6,688,000

+0%

Adjusted operating profit

£854,000

£800,000

+7%

Profit before tax, adjusted

£714,000

£663,000

+8%

Profit before tax

£263,000

£191,000

+38%

Cash generated

(£465,000)

(£301,000)


Net debt

£2,997,000

Dec-17 £2,278,000


Shareholders' funds

£7,393,000

Dec-17 £7,596,000






Shares in issue

31,827,088

31,691,138


Weighted average number of shares

31,818,043

30,241,422


Earnings after tax

£207,000

£157,000

+32%

Adjusted earnings (Earnings after tax excluding amortisation, acquisition costs, finance timing and investment income)

£646,000

£631,000

+2%





EPS

0.65p

0.52p

+25%

Adjusted EPS

2.03p

2.09p

(3%)





Dividend

0.8p

0.7p

+14%





Branches

203

206

(1%)

 

 

Revenue

Network income from sales and lettings across the network rose by 2% to £17.9m as against a market as reported down 9% and £17.6m for the same first half period last year.  Turnover remained flat at £6.7m (2017: £6.7m) due to the effect of well documented challenging market conditions. 

 

We continued the strategy of converting independent agents to new franchise branches and in the six month period to June 2018 opened six (2017: six).  This brings the total number of branches to 203 (2017: 206).

 

Profit before tax, adjusted to exclude amortisation, amortised finance costs, acquisition costs and other finance income

Adjusted profit before tax for the six months ended June 2018 was £714,000, an increase of 8% on the equivalent period last year (2017: £663,000). 

 

Adjusted operating profit

Adjusted operating profit for the six months to June 2018 was £854,000, an increase of 7% on the same period last year (2017: £800,000).

 

Earnings per share

Basic earnings per share for the six months ended 30 June 2018 was 0.65p (2017: 0.52p).  Adjusted earnings per share, excluding amortisation and acquisition costs, finance timing investment income and share-based payment expenses for the six months to June 2018 was 2.03p (2017: 2.09p).

 

Dividend

The Board declares an interim dividend of 0.8p (Interim 2017: 0.7p) per share, an increase of 14% as part of its policy to pay a progressive dividend whilst maintaining dividend cover of at least two times.  The dividend will be payable on 19 October 2018 to shareholders on the register on 21 September 2018.

 

Cash flow

The Company generated net cash from operations of £222,000 during the six months to June 2018.  We repaid £325,000 in debt (2017: £45,000).  There were further debt drawdowns in the six months to June 2018 totalling £564,000, which was used along with the operating cash inflow to fund the opening of more franchisee offices during the first six months of 2018.

 

Liquidity and capital reserves

As at 30 June 2018, the Group's cash balance was £1,117,000 (June 2017: £886,000) with net debt of £2,997,000 (December 2017: £2,278,000).

 

Risks

The primary risk to the business continues to be the state of the UK property market.  Some uncertainty remains in the market place, as individuals and businesses take stock and assess the macro-economic outlook.  Our balance between franchising, sales and lettings and geographical mix allows us, as these results have demonstrated, to mitigate against this risk.

 

 

Ed Jones

Chief Financial Officer

6 September 2018

 

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2018

 



6 months ended

30 June 2018

6 months ended

30 June 2017

Year

ended

31 December 2017



£'000s

£'000s

£'000s

 

 




Revenue

 

6,699

6,688

14,169

 

 

 

 

 

Ongoing administrative expenses

 

(5,845)

(5,888)

(11,938)

Operating profit before depreciation, amortisation, costs of business combinations and share-based payments

 

854

800

2,231

 

 

 

 

 

Depreciation and adjustments on disposal

 

(57)

(63)

(137)

Amortisation and adjustments on disposal

 

(409)

(349)

(731)

Business combination acquisition expenses

 

(2)

(49)

(50)

Share-based payment expense

 

(33)

(63)

(118)

Operating profit

 

353

276

1,195

 

 

 

 

 

Finance income

 

8

-

18

Finance costs

 

(98)

(85)

(185)

 

 

 

 

 

Profit before taxation

 

263

191

1,028



 

 

 

Taxation

 

(56)

(34)

(133)

 

 

 

 

 

Profit for the period

 

207

157

895

 

 

 

 

 

Other comprehensive income

 

-

-

-

 

 

 

 

 

Total comprehensive income for the period attributable to equity owners of the parent

 

207

157

895

 

 

 

 

 

Basic earnings per share

4

0.65p

0.52p

2.89p

 

 

 

 

 

Diluted earnings per share

4

0.63p

0.50p

2.77p

 

 

Consolidated Statement of Financial Position

As at 30 June 2018

 

 

 

 

 

Notes

30 June 2018

30 June

2017

31 December 2017

 

 

£'000s

£'000s

£'000s

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Intangible assets

3

11,195

11,075

11,174

Property, plant and equipment

 

305

383

344

Investments

 

50

1

1

Deferred tax assets

 

124

62

87

 

 

11,674

11,521

11,606

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

 

1,840

1,687

1,645

Cash and cash equivalents

 

1,117

886

1,582

 

 

2,957

2,573

3,227

 

 

 

 

 

Total assets

 

14,631

14,094

14,833






LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Borrowings

 

80

373

77

Finance lease liabilities

 

20

28

19

Current tax liabilities

 

250

134

163

Trade and other payables

 

2,003

2,000

2,291

 

 

2,353

2,535

2,550

 

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

 

4,034

3,560

3,783

Obligations under finance leases

 

52

72

62

Other payables

 

19

43

19



4,105

3,675

3,684






Provisions for liabilities

 

 

 

 

Provisions

 

60

50

55

Deferred tax liabilities

 

720

849

768

 

 

780

899

823

 

 

 

 

 

Total liabilities

 

7,238

7,109

7,237






Net assets


7,393

6,985

7,596

 

 





EQUITY

 

 

 

 

Share capital

 

1,273

1,268

1,272

Share premium

 

4,107

4,068

4,105

Merger reserve

 

899

899

899

Retained earnings

 

1,114

750

1,320






Total equity

 

7,393

6,985

7,596


Consolidated Statement of Changes in Equity

For the six months ended 30 June 2018


Share

capital


Share

premium


Merger reserve


Retained earnings


Total equity attributable to owners of the parent


£'000s


£'000s


£'000s


£'000s


£'000s











At 1 January 2017

1,145


2,633


899


971


5,648

Profit and total comprehensive income

-


-


-


157


157

Dividends paid

-


-


-


(412)


(412)

Credit to equity for equity settled share-based payments

-


-


-


 63


63

Issue of share capital

123


1,432


-


-


1,555

Deferred tax on share-based payment transactions

-


-


-


(26)


(26)

Exercise of share options

-


3


-


(3)


-











At 30 June 2017

1,268


4,068


899


750


6,985











Profit and total comprehensive income

-


-


-


738


738

Dividends paid

-


-


-


(222)


(222)

Credit to equity for equity settled share-based payments

-


-


-


55


55

Issue of share capital

4


112


-


-


116

Costs of raising equity

-


(76)


-


-


(76)

Exercise of share options

-


1


-


(1)


-











At 31 December 2017

1,272


4,105


899


1,320


7,596











Profit and total comprehensive income

-


-


-


207


207

Dividends paid

-


-


-


(477)


(477)

Credit to equity for equity settled share-based payments

-


-


-


33


33

Issue of share capital

1


2


-


-


3

Deferred tax on share-based payment transactions

-


-


-


31


31











At 30 June 2018

1,273


4,107


899


1,114


7,393

 


Consolidated Statement of Cashflows

For the six months ended 30 June 2018

 

           

6 months

ended

30 June 2018

6 months

ended

30 June 2017

Year ended

30 December 2017


£000's

£000's

£000's





Cash flow from operating activities




Operating profit

353

276

1,195

Adjustment for:




Depreciation of property, plant and equipment

57

71

137

Amortisation of intangible assets

391

350

755

(Gain) on disposal of property, plant and equipment

-

(1)

-

Loss/(profit) on disposal of intangible assets

18

(8)

(24)

Share options fair value expense

33

63

118

Expensed/(released) element of provisions

5

(17)

(16)

Share exchange transactions

(50)

-

-

Costs of acquisitions

3

49

50

Changes in working capital:




Increase in trade and other receivables

(195)

(235)

(193)

Decrease in trade and other payables

(287)

(374)

(64)

Cash generated from operations

328

174

1,958

Interest paid

(83)

(83)

(147)

Income tax paid

(23)

(68)

(246)

Net cash from operating activities

222

23

1,565





Cash flow from investing activities




Capital expenditure (tangible and intangible)

(747)

(311)

(920)

Proceeds from sale of tangible and intangible assets

297

20

114

Business combinations, net of cash acquired

-

(2,459)

(2,460)

Repayments for deferred consideration

-

(11)

(52)

Interest received

8

-

18

Net cash used in investing activities

(442)

(2,761)

(3,300)





Cash flow from financing activities




Dividends paid to shareholders

(477)

(412)

(634)

Repayment of borrowings

(325)

(45)

(90)

Issue of borrowings

564

1,617

1,851

Issue of share capital

2

1,305

1,345

Repayments for deferred consideration debentures

-

-

(295)

Repayment of capital element of finance lease contracts

(9)

(28)

(47)

Net cash (used in)/ from  investing activities

(245)

2,437

2,130





(Decrease) in cash and cash equivalents

(465)

(301)

395

Net cash and cash equivalents at beginning of the period

1,582

1,187

1,187

Net cash and cash equivalents at end of period

1,117

886

1,582

 

 

Notes to the Financial Statements

For the six months ended 30 June 2018

 

1.    General information

Hunters Property Plc is a Company incorporated in the United Kingdom. The registered address of the Company is Apollo House, Eboracum Way, York, YO31 7RE. The consolidated financial statements (or "financial statements") incorporate the financial statements of the Company and entities (its subsidiaries) controlled by the Company (collectively comprising the "Group").

 

The principal activity of the Group is the provision of property services to consumers and businesses which include sales, lettings, franchising and related services.

 

2.    Accounting policies

 

2.1. Basis of preparation

 

The financial information set out in these interim consolidated financial statements for the six months ended 30 June 2018 is unaudited. The financial information presented are not statutory accounts prepared in accordance with the Companies Act 2006, and are prepared only to comply with AIM requirements for interim reporting.  Statutory accounts for the year ended 31 December 2017 on which the auditors gave an audit report which was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

2.2. Basis of consolidation

 

The Group financial information consolidates those of the Parent Company and the subsidiaries that the Parent has control of. Control is established when the Parent is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary.

 

Where a subsidiary is acquired/disposed of during the period, the consolidated profits or losses are recognised from/until the effective date of the acquisition/disposal.

 

All inter-company balances and transactions between group companies have been eliminated on consolidation.

 

Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by the Group.

 

2.3. Going concern

 

When assessing going concern the Directors have looked at the period of 12 months from the date of approval of the interim financial statements.  The Directors are satisfied that the Group has sufficient resources to continue in operation and accordingly these interim financial statements have been prepared on a going concern basis.

 

3.    Intangible Fixed Assets

 


Goodwill

Software

 

FDG's & Rebrands

           Brands

Customer Lists

Total


£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

Cost







At 1 January 2018

4,661

758

2,563

637

4,487

13,106

Additions - separately acquired

-

59

660

-

9

728

Disposals

-

-

(412)

-

-

(412)

At 30 June 2018

4,661

817

2,811

637

4,496

13,422








Amortisations and Impairment







At 1 January 2018

35

215

446

206

1,030

1,932

Amortisation charged for the year

-

60

93

32

206

391

Amortisation on disposal

-

-

(96)

-

-

(96)

At 30 June 2018

35

275

443

238

1,236

2,227








Carrying amount







At 30 June 2018

4,626

542

2,368

399

3,260

11,195








At 31 December 2017

4,626

543

2,117

431

3,457

11,174

 

Franchise Development Grants ("FDG's") and rebrand costs are externally incurred expenses at the inception of certain contracts with franchisees in order to assist with the transition to using the Hunters brand name. The amounts invested are amortised over the minimum life of the underlying franchise contract, typically 10 to 15 years.

 

4.      Earnings per share

 

The calculation of the basic and diluted earnings per share is based on the following data:

 

Earnings

30 June 2018

 

30 June    2017

 

£'000s

 

£'000s

Earnings for the purpose of basic earnings per share being net profit attributable to owners of the parent

207

 

157

Effects of dilutive potential ordinary shares

-

 

-

 

 

 

 

Earnings for the purposes of diluted earnings per share

207

 

157

 

 

Number of shares

30 June 2018

 

30 June    2017

 

£

 

£

Weighted average number of ordinary shares for the purposes of basic earnings per share

 

31,818,043

 

 

30,241,422

 

 

 

 

Effects of dilutive potential ordinary shares

1,016,037

 

1,076,661

 

 

 

 

Weighted average number of ordinary shares for the purposes of diluted earnings per share

 

32,834,080

 

 

31,318,083

 

Earnings per share

 

Pence per weighted average shares

0.65p


0.52p





Pence per weighted average diluted shares

0.63p


0.50p

 

The Directors use adjusted earnings before time-value interest, investment revenue, amortisation, and costs of acquisition ("Adjusted Earnings") as a measure of ongoing profitability and performance. The calculated Adjusted Earnings for the current period of accounts is as follows:

 

Adjusted Earnings per Share

30 June 2018

 

30 June    2017

 

£'000s

 

£'000s

Profit after taxation

207

 

157

Adjusted for:

 

 

 

Time-value interest costs

3

 

13

Investment revenues

(8)

 

-

Amortisation

409

 

349

Costs of acquisition

2

 

49

Share-based payment expense

33

 

63

 

 

 

 

Adjusted Earnings

646

 

631

 

Adjusted Earnings per share

 

Pence per weighted average shares

2.03p


2.09p





Pence per weighted average diluted shares

1.97p


2.02p

 

Copies of the Interim Report are available from the Company Secretary at Apollo House, Eboracum Way, York, YO31 7RE and on the Company's website www.hunters.com.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Interim Results - RNS