REG - Property FranchiseGp - Acquisition of The Guild and Fine & Country

Property FranchiseAnnouncement

03/06/2024 07:00

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RNS Number : 7439Q  Property Franchise Group PLC (The)  03 June 2024

3 June 2024

THE PROPERTY FRANCHISE GROUP PLC

(the "Company" or the "Group")

 

Acquisition of The Guild of Property Professionals and Fine & Country

Earnings enhancing network expansion

 

The Property Franchise Group PLC (AIM: TPFG), the UK's largest multi-brand
property franchisor, is pleased to announce the acquisition of the entire
issued share capital of both GPEA Limited and associated companies, trading as
The Guild of Property Professionals ("The Guild") and as Fine & Country,
(together the "Acquisition") for a total consideration of approximately £20
million.  The consideration is split with £15 million payable in cash on
completion and £5 million payable on the first anniversary of completion of
the Acquisition.

Highlights

·    The Guild and Fine & Country provide services to a total of 1,036
outlets, of which 65 are international outlets

·    In the year ended 31 December 2023, the Acquisition produced audited
revenues of £13.2 million, audited EBITDA of £3.5 million and PBT of £3.3
million

o  73% of FY2023 revenues were from recurring memberships and licences

·    Total consideration represents c.5.7x 2023 audited EBITDA

·    Initial consideration of approximately £15 million, payable in cash,
has been funded through a new facility with Barclays Bank

·    Post-Acquisition leverage for the Group will be below 1x FY2023 pro
forma adjusted EBITDA

·    The Acquisition fits within the Group's strategy to acquire accretive
businesses with complementary and recurring revenue streams which deliver
network expansion and geographic growth

·    Well regarded and experienced management team, including Iain
Mackenzie, who will remain with the businesses

·    Expected to be immediately earnings enhancing

 

Gareth Samples, CEO of TPFG, commented: "The Acquisition continues to deliver
on our wider strategy of delivering breadth and depth to our network. It
further enhances TPFG's recurring revenue streams, adds the additional
dimension of licensing to its platform and one significant complementary
service, printed marketing materials.  I am really excited about working
alongside Iain McKenzie and the team to continue the growth across the Group
and providing additional benefits to our network."

 

Iain McKenzie, CEO of the Guild and Fine & Country added: "I am genuinely
delighted and excited by the opportunities created by our two businesses
coming together; placing The Guild and Fine & Country under an established
and growing organisation, broadening TPFG's geographical footprint.  We have
a proven track record of delivering innovation and marketing services across
our network, and, as a consequence of now being part of a larger group, our
customers will benefit from existing supplier partnerships, allowing us to
introduce significant additional benefits."

Background to and Rationale for the Acquisition

Having successfully completed the transformational merger with Belvoir in
March 2024, the Group continues to deliver against its acquisition strategy.
 The Acquisition of The Guild and Fine & Country from Nurtur.Group
Limited represents an opportunity to further accelerate growth through
additional recurring network income.  With the initial consideration of £15
million payable in cash funded from the Group's debt facility, the Acquisition
will be immediately earnings accretive.  Following completion, the balance
sheet remains strong and overall leverage post completion will remain below
one times adjusted pro forma EBITDA for FY2023*.

* FY2023 pro forma adjusted EBITDA of £23.2 million, including Belvoir which
was acquired in March 2024.

Group pro-forma income statement highlights

 Audited (£'m)    TPFG*       The Acquisition     Combined
                  2022  2023  2022      2023      2022   2023
 Revenue          60.9  61.5  13.5      13.2      74.4   74.7
 Gross Profit     41.9  42.4  9.5       8.9       51.4   51.3
 Adjusted EBITDA  22.4  23.2  3.5       3.7       25.9   26.9
 PBT              18.0  18.1  3.2       3.3       21.2   21.4

* Includes Belvoir financials for both 2022 and 2023

 

The Acquisition broadens TPFG's existing network of 910 outlets, increasing
the combined network to over 1,946 outlets and brings highly complementary
expertise to the Group. The Acquisition immediately strengthens TPFG's reach
and its marketing and, for the first time, delivers an international
footprint.

The Guild is a well-known and longstanding brand, established some 30 years
ago, which supports its network of 778 outlets with a range of services and
benefits.  These include marketing, compliance, and training.

Fine & Country supports its licensees with the technologies, market
insight and marketing capabilities of a global brand and operates in 193
locations across the UK and a further 65 across Europe, Africa, Asia, and
Australia.

Through its brands and complementary networks divisions, TPFG's platform will
allow its newest partners access to additional benefits and services.  TPFG
will be gaining access to the 20 strong team of marketing professionals who
have so successfully driven the growth in The Guild and Fine & Country.
 

The two businesses will continue to operate under their existing brands.  The
experienced management teams in each of The Guild and Fine & Country will
remain in situ to continue to support their network division.

 

There will be no changes to the Board of TPFG following completion of the
Acquisition.

 

Consideration and New Debt Facility

TPFG is paying an initial consideration of £15 million ("Initial
Consideration"), payable in cash on completion, subject to customary
adjustments, funded through a draw down on TPFG's new debt facility with
Barclays Bank.

To fund the Acquisition and support future growth, TPFG has entered into a new
debt facility with Barclays for up to £27 million, of which £15 million is
being drawn to fund the Initial Consideration.

 

This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
of this announcement, this information is now considered to be in the public
domain.

For further information, please contact:

 The Property Franchise Group PLC           01202 405549

 Gareth Samples, Chief Executive Officer

 David Raggett, Chief Financial Officer

 Canaccord Genuity Limited                  020 7523 8000

 (Nominated Adviser and Joint Broker)

 Max Hartley

 Harry Rees

 Singer Capital Markets (Joint Broker)      020 7496 3000

 Rick Thompson

 James Fischer

 Alma Strategic Communications              020 3405 0209

 Justine James                             propertyfranchise@almastrategic.com

                                         (mailto:propertyfranchise@almastrategic.com)
 Joe Pederzolli

 Kinvara Verdon

About The Property Franchise Group PLC:

 

The Property Franchise Group PLC (AIM: TPFG) is the UK's largest multi-brand
property franchisor, with a network of over 910 lettings and estate agency
businesses delivering high quality services to residential clients, combined
with an established Financial Services business.

 

The Company was founded in 1986 and has since strategically grown to a diverse
portfolio of 16 brands operating throughout the UK, comprising longstanding
high-street focused brands and two hybrid brands. The Property Franchise Group
is also a member of two leading mortgage networks through its mortgage
brokers, Brook Financial (MAB) and The Mortgage Genie (Primis).

 

TPFG's brands are: Belvoir, CJ Hole, Country Properties, Ellis & Co,
EweMove, Hunters, Lovelle, Martin & Co, Mr and Mrs Clarke, Mullucks,
Newton Fallowell, Nicholas Humphreys, Northwood, Parkers, and Whitegates and
following this acquisition will include Fine & Country and The Guild of
Property Professionals.

 

Headquartered in Bournemouth, the Company was listed on AIM on the London
Stock Exchange in 2013. More information is available
at www.propertyfranchise.co.uk (http://www.propertyfranchise.co.uk/)

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