REG - Property FranchiseGp - Interim Results
10/09/2024 07:00
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RNS Number : 5094D Property Franchise Group PLC (The) 10 September 2024
10 September 2024
THE PROPERTY FRANCHISE GROUP PLC
("TPFG", the "Company" or the "Group")
Interim Results for the six months ended 30 June 2024
Transformational period for the Company, doubling the size of the business and
increasing interim dividend by 30%
The Property Franchise Group PLC, the UK's largest multi-brand property
franchisor, is pleased to announce its interim results for the period ended 30
June 2024.
The last six months has seen the commencement of another transformational
period for the Group following the merger with the Belvoir Group PLC
("Belvoir") and the acquisition of GPEA Limited ("GPEA"), owner of The Guild
of Property Professionals and Fine & Country. Group revenue more than
doubled compared to the prior period with significant increases in franchising
and financial services, along with the addition of a new licensing revenue
stream.
Financial Highlights:
· Group revenue increased 104% to £26.9m (H1 2023: £13.2m)
o 3% like for like increase to £13.6m(1)
· Management Service Fees ("MSF") increased 60% to £12.3m (H1 2023: £7.7m)
o 8% like for like increase to £8.3m(1)
· Adjusted EDITDA(2) increased 65% to £9.6m (H1 2023: £5.8m)
· Adjusted Profit before tax(2) increased by 71% to £9.1m (H1 2023: £5.3m)
Profit before tax increased by 15% to £4.8m (H1 2023: £4.2m)
· Adjusted basic earnings per share(2) increased 12% to 15.5p (H1 2023: 13.9p)
· Net debt of £14.3m after borrowing £20m to fund the acquisition of GPEA (H1
2023: net cash of £0.7m)
· Cash generated from operations increased to £3.7m (H1 2023: £3.6m) after the
payment of the majority of the acquisition costs in H1 2024
· Increased interim dividend by 30% to 6.0p (H1 2023: 4.6p)
(1)Like for like comparison excluding the impact of the acquisition of Belvoir
Group on 7 March 2024, and GPEA on 31 May 2024
(2)Before share-based payments charge, exceptional items and amortisation
arising on consolidation.
Operational Highlights:
· Merger with Belvoir in March 2024 and acquisition of GPEA in May 2024
· Sales agreed pipeline increased 67% to £47.5m (H1 2023: £28.4m)
o 16% like for like increase to £32.8m(1)
· Managing 152,500 rental properties (H1 2023: 77,000)
o 2% like for like increase to 78,000(1)
· EweMove sold 22 new territories (H1 2023: 17)
· Financial services commissions increased 756% to £7.7m (H1 2023: £0.9m),
with all of the increase being driven by contribution from Belvoir
· Senior leadership team restructured and objectives agreed as part of the
integration process
Chief Executive Officer, Gareth Samples, commented: "I am delighted to be
reporting record results following an exciting and transformational period
where revenue doubled through the merger with Belvoir. We have continued to
benefit from the strong demand in the lettings market and to achieve growth in
sales and financial services despite sales completions being slower than
anticipated at a national level which is testament to the excellence across
the Group. Furthermore, the acquisition of GPEA at the period end adds
significant further scale and opportunities to grow shareholder value.
With activity levels increasing and revenue generation typically higher in the
second half of the financial year, combined with our confidence in delivering
further profitability in 2024, I am pleased to announce a 30% increase in the
interim dividend to 6p (H1 2023: 4.6p).
With our highest ever sales agreed pipeline of £47.5m and at least one
interest rate reduction behind us, the Board is confident that trading remains
at least in line with market expectations for the full year."
For further information, please contact:
The Property Franchise Group PLC 01202 405 549
Gareth Samples, Chief Executive Officer
David Raggett, Chief Financial Officer
Canaccord Genuity Limited (Nominated Adviser and Joint Broker) 020 7523 8000
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
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 1,946 outlets 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 18 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, Fine & Country, Hunters, Lovelle, Martin & Co, Mr and Mrs
Clarke, Mullucks, Newton Fallowell, Nicholas Humphreys, Northwood, Parkers,
The Guild of Property Professionals and Whitegates.
Headquartered in Bournemouth, the Company was listed on AIM on the London
Stock Exchange in 2013 and entered the AIM 100 in July 2024.
More information is available at www.propertyfranchise.co.uk
(http://www.propertyfranchise.co.uk/)
Chief Executive Officer's Statement
Introduction
We have doubled our revenue in the period through the merger with Belvoir in
March 2024 and we will grow revenue further through the additional
contribution of GPEA in the second half of the year. I am more enthused than
ever about the significant opportunities that our Group has ahead of it.
This is the second transformational period I have overseen since joining the
Group in 2020. What differentiates this period from the last, is the
significantly increased scale we now have, with 1,900 franchisees/licensees in
the UK together with 300 mortgage advisors.
Scale affords us the opportunity to develop a fuller service offering to our
franchisees/licensees and their customers. We are investing in technology that
we believe will enhance the customer experience, deliver more leads and
enhance our UK footprint.
As part of the integration process, we have recently restructured our senior
leadership team into a single team, leveraging our expanded internal talent.
This is a key step in our journey and will support our primary focus of
supporting our network to achieve further growth.
I am incredibly excited and energised by the potential we have created.
Working alongside our talented franchisees/licensees, driven by the commitment
of our newly appointed senior leadership team, supported by our key supply
partners, my aim is for the Group to become the UK market leader in our core
services.
Results
I am delighted to be reporting record results following an exciting and
transformational period where revenue doubled through the merger with Belvoir.
We have continued to benefit from the strong demand in the lettings market and
to achieve growth in sales and financial services despite sales completions
being slower than anticipated at a national level which is testament to the
excellence across the Group. Furthermore, the acquisition of GPEA at the
period end adds significant further scale and opportunities to grow
shareholder value.
The ability with which we are able to take advantage of the market conditions
whether favourable or less so is testament to our strategy, the strength of
our network, our business owners' determination, the models they operate
within and the investment we have committed to our management team. Our
mission remains the same, to support our network business owners in building
bigger and more profitable businesses. It's the combination of these factors
which has meant we have been able to report ever increasing organic revenues
and profitability.
We delivered Group revenue of £26.9m in the period, representing a 104%
increase on the same period last year. Furthermore, we increased profit before
tax by 15% in the period to £4.8m and the underlying profits, as represented
by adjusted profit before tax, by 71% to £9.1m.
I am pleased to confirm that the Group has never been in a stronger position
having completed two earnings accretive acquisitions in the period. Whilst
some uncertainty still surrounds the broader market, there are clear
indications that demand is set to increase for two of our main revenue streams
and remain at current levels for lettings. Moreover, we remain as ambitious as
ever to execute on our strategic growth plans.
Operational review
We have split the Group into three distinct business segments, Property
Franchising, Financial Services and Licensing to ensure clarity and focus. The
first two existed before the merger with Belvoir although the scale of our
financial services division has increased very significantly since the merger.
Licensing is new following the acquisition of GPEA. All segments have
increased significantly due to the merger with Belvoir and acquisition of
GPEA. Our growth rates will become more meaningful as we settle into this
structure and realise the synergies.
Out of total revenues of £26.9m in the period, Property Franchising accounted
for 67%, Financial Services for 29% and Licensing for 4%, reflecting the
relative contributions in the period.
Management Service Fees ("MSF"), the royalties earned from our brands and the
activities of our franchisees, were the major source of revenue during the
first half in Property Franchising. Lettings activities generated 68% of MSF
and sales activities generated 32% of MSF. MSF from the franchised network
increased by 60% to £12.3m.
Removing the impact of the merger with Belvoir, Lettings MSF grew by 8%, in
line with the ONS Private Sector Index which showed a similar annual rental
inflation to June 2024. With continued strong demand, Lettings continues to be
an important driver of the Group's revenue growth.
Similarly, Sales MSF increased by 7%, against a market where
adjusted UK property transactions for January to June were flat on the same
period in the prior year. The Group's sales agreed pipeline at 30 June 2024
was 16% higher on a like for like basis than 30 June 2023 which bodes well for
H2 trading despite completion times remaining high.
Revenues from financial services are now dominated by the contribution from
Belvoir and its network of 300 advisors. Total financial services revenues
increased by 18%, with the acquisitions made by Belvoir in 2023 contributing
approximately half of this increase.
Board Changes
Further to the separate announcement released today, the Board is pleased to
confirm that following a thorough process, it is delighted to announce the
appointment of Ben Dodds to succeed David Raggett as Chief Financial Officer
on 1 January 2025. Ben will join the Company in October 2024 as CFO designate
which will allow time for an orderly handover process.
Current Trading and Outlook
We expect the strong demand in the lettings market to continue at similar
levels to the first half for the remainder of this year and probably into 2025
with the rate of rental inflation then beginning to trend towards wage
inflation.
Our growth in sales revenues is anticipated to improve further in H2 given the
increasing level of activity with Zoopla reporting growth in listings of 15%
over the prior year and Rightmove reporting growth in sales agreed of 16% over
the prior year, as the period ended. Both measures encouraging us to believe
that 2025 could see an increase on the 1.1m sales completions we forecast for
the market this year. Our network also has its highest ever sales-agreed
pipeline going into H2 of £47.5m, the vast majority of which should be
realised as fees by our network in H2.
Similarly, our financial services revenues are growing as the sales market
improves and, with the Bank of England reporting the highest number of
mortgage applications in July 2024 since September 2022 together with the
first interest rate cut, we expect more growth in H2 and this to continue into
2025 as remortgage activity improves.
Our focus for the remainder of the year will be pushing ahead with the
integration of our new businesses, continuing to move ahead with realising the
synergies and progressing our strategic priorities.
With a record pipeline and at least one interest rate reduction behind us, the
Board is confident that trading remains at least in line with market
expectations for the full year.
Financial Review for FY24 Interim Results
Revenue
Revenue for the six months ended 30 June 2024 increased 104% to £26.9m (H1
2023: £13.2m). The revenue contribution from Belvoir was £12.3 million and
GPEA £1.0m with the remaining £13.6m derived from underlying TPFG. Like for
like growth of the underlying TPFG business over the period was 3%.
In the CEO's report, Gareth has highlighted that we have split the Group into
three distinct business segments, Property Franchising, Financial Services and
Licensing. Out of total revenues of £26.9m in the period, Property
Franchising accounted for £18.2m (67%), Financial Services for £7.7m (29%)
and Licensing for £1.0m (4%). In June 2024, the first full month of trading
in every business segment, the mix of revenue was: Property Franchising 53%,
Financial Service 29% and Licensing 18%.
Unaudited Unaudited Audited
6 Months Ended 6 Months Ended 12 Months Ended
30.06.24 30.06.23 31.12.23
£ £ £
Property Franchising
Management Service Fees 12,276 7,696 16,099
Owned offices' revenue 3,172 2,239 4,902
Franchise sales 352 232 458
Franchisee support and similar services 2,352 2,119 4,317
18,152 12,286 25,776
Financial Services 7,672 896
Financial services commissions
1,502
Licensing
Income from licensees 1,029 - -
26,853 13,182 27,278
The recurring revenue as a percentage of total revenue in June 2024 was 55%.
In H1 FY23, our recurring revenue as a percentage of total revenue was 65%.
The expected reduction in the percentage of recurring revenue arises from the
merger with Belvoir and its significant financial services division.
However, this will be countered by the acquisition of GPEA with its licensing
revenues.
Property Franchising Segment
Management Service Fees ("MSF")
MSF from our franchised network increased by 60% to £12.3m (H1 2023: £7.7m).
The increase of £4.6m resulted from a like for like increase of £0.6m (8%)
over H1 FY23 and a contribution from Belvoir of £4.0m.
H1 FY24 Total Growth Like for Like Growth Total Result Like for Like Result Total Mix Like for like Mix
Lettings MSF 78% 8% £8.4m £5.2m 68% 63%
Sales MSF 31% 7% £3.9m £3.1m 32% 37%
Lettings MSF continued to perform strongly with overall growth in H1 of 78%
and like for like growth of 8%, in line with reported annual rental inflation.
The mix of lettings in like for like MSF was 63% (H1 2023: 61%).
Sales MSF increased overall by 31%. Like for like sales MSF increased by 7%,
slightly lower than our own expectations for H1 but much higher than
seasonally adjusted UK property transactions for January 24 to June 24 which
were flat on the same period in the prior year. The mix of sales in like for
like MSF was 37% (H1 2023: 38%).
Owned Offices
We operated nine branches under our Hunters brand prior to the merger with
Belvoir. The merger has resulted in three further branches being operated in
the Group as at 30 June 2024, one for each of the following brands; Belvoir,
Newton Fallowell and Nicholas Humphries. A fourth branch, Belvoir Grantham,
was franchised out shortly after the merger.
The revenue from owned offices increased by 42% to £3.2m (H1 2023: £2.2m)
with the mix being; Lettings 67%, Sales 32%, Other 1%. Like for like revenue
increased by 6% to £2.3m (H1 FY23 £2.2m) with the mix being; Lettings 65%,
Sales 34%, Other 1%.
Franchise Sales
Franchise sales revenue increased by 52% to £0.4m (H1 2023: £0.2m) and like
for like revenue increased by 26% to £0.3m (H1 2023: £0.2m). The latter was
generated almost equally from resales of high-street led franchises and new
territory sales by EweMove. There has been an increase in applicants in
EweMove and this was reflected in an increase of 29% in H1 sales to 22 (H1
2023: 17).
Franchisee Support and Similar Services
The revenue from franchisee support and similar services consists of two main
elements; support with the management of landlord's properties and the
provision of operating software together with front line support to our
franchisees.
Franchisee support and similar services revenue increased by 11% to £2.3m (H1
2023: £2.1m) and like for like revenue was £2.1m (H1 2023: £2.1m).
Financial Services Segment
This segment generates its revenue from the broking of mortgages and the sale
of life assurance policies to retail customers through its network of advisors
which totalled 300 at the end of the period.
The revenue from the financial services segment increased by 756% to £7.7m
(H1 2023: £0.9m) with a like for like reduction of £0.4m and a contribution
from Belvoir of £7.2m.
Belvoir's financial services for the first 6 months of FY24 generated revenue
of £9.9m, an increase of 18% over the prior period with approximately half of
that increase being generated by the business acquired in FY23.
Licensing Segment
This segment generates its income from the licence fees and subscriptions paid
by its members together with property related services that it sells to its
members such as marketing in both print and digital format.
The revenue generated in its first month of trading was £1.0m of which
licence fees contributed £0.8m. GPEAs revenue for the first 6 months of FY24
was 2% lower than the prior period at £6.6m.
Cost of Sales
Cost of sales increased by 226% to £8.9m (H1 2023: £2.7m). The increase of
£6.2m resulted from a contribution from Belvoir of £5.9m and a contribution
from GPEA of £0.4m. Like for like cost of sales decreased slightly by £0.1m.
Administrative expenses
Administrative expenses before exceptional items increased by 87% to £10.5m
(H1 2023: £5.6m). The increase of £4.9m resulted from an increase in
amortisation arising on consolidation of £1.1m, a contribution from Belvoir
of £2.8m (owned offices costs being moved to cost of sales) and a
contribution from GPEA of £0.5m. Like for like administrative expenses
increased by 9% to £6.1m with the additional Board member costs of £0.2m and
an increase in the bad debt provision of £0.2m being the main reasons.
EBITDA
The Group's EBITDA increased 34% to £7.1m (H1 2023: £5.3m). The increase
resulted from a contribution from Belvoir of £3.7m, a contribution from GPEA
of £0.2m, exceptional costs of £2.2m and a reduction in the share-based
payment charge of £0.1m.
There were exceptional costs of £2.2m in the period relating to the
acquisition of Belvoir and GPEA. Adding back these exceptional costs to EBITDA
along with the share-based payments charge of £0.3m results in an adjusted
EBITDA which increased 65% to £9.6m (H1 2023: £5.8m).
Operating profit
Operating profit increased by 12% to £4.9m (H1 2023: £4.4m) and operating
margin was 18% (H1 2023: 33%). The reduction in operating margin was caused by
additional amortisation arising on consolidation of £1.1m, and the
exceptional costs of £2.2mand a like for like reduction in the underlying
TPFG of £0.1m. Offsetting this reduction was a fall in the share-based
payment charge of £0.1m, a contribution from Belvoir of £3.6m, a
contribution from GPEA of £0.2m
Adding back the share-based payment charge, exceptional costs and the
amortisation arising on consolidation, the adjusted operating margin was 34%
(H1 2023: 42%).
Profit before tax
Profit before tax increased 15% to £4.8m (H1 2023: £4.2m). The increase of
£0.6m resulted from exceptional costs of £2.2m, additional amortisation on
consolidation of £1.1m, a contribution by Belvoir of £3.7m and a
contribution by GPEA of £0.2m.
Adding back amortisation arising on consolidation of £1.8m, exceptional costs
of £2.2m, and a share-based payment charge of £0.3m derives adjusted profit
before tax which increased 71% to £9.1m (H1 2023: £5.3m).
At a segmental level, total profit before tax increased by 52% to £8.7m.
Property Franchising increased its profit before tax by 38% to £7.4m (H1 2023
£5.3m) and Financial Services increased its profit before tax by 184% to
£1.1m (H1 2023: £0.4m). In its first month of trading, Licensing generated a
profit before tax of £0.2m.
Taxation
The income tax expense increased by 32% to £1.2m (H1 2023: £0.9m) with
£0.1m arising from the increase in the corporation tax rate in April 23 to
25%. The remainder arises from the increase in taxable profits and the release
from deferred tax.
Profit and Total Comprehensive Income
Statutory profit after income tax expenses attributable to the owners of the
parent increased by 11% to £3.7m (H1 2023: £3.3m).
Earnings per share
Basic earnings per share decreased by 30% to 7.2p (H1 2023: 10.3p) based on a
weighted average number of shares in issue in the period of 51,422,733 (H1
2023: 32,041,966). Similarly, diluted earnings per share decreased by 32% to
7.0p (H1 2023: 10.3p) based on an estimate of diluted shares in issue of
52,842,604 (H1 2023: 32,141,574). Both measures are impacted by the shares
issued in March 2024 in connection with the merger with Belvoir, the costs of
the acquisitions of Belvoir and GPEA of £2.2m (shown as exceptional
administrative expenses on the face of the consolidated statement of
comprehensive income) and the increase in the amortisation arising on
consolidation in the period following these transactions of £1.1m (costs
which are included within administrative expenses before exceptional items).
Adjusted basic earnings per share, the result of dividing adjusted earnings by
the weighted average number of shares in issue in the period of 51,422,733 (H1
2023: 32,041,966), increased by 12% to 15.5p (H1 2023: 13.9p). Similarly,
adjusted diluted earnings per share, the result of dividing adjusted earnings
by the weighted average number of shares in issue in the period of 52,842,604
(H1 2023: 32,141,574), increased by 9% to 15.1p (H1 2023: 13.9p).
Dividends
The Board has pursued a progressive dividend policy to generate an attractive
return for shareholders and, given the Group's strong financial standing, it
will continue to do so. At the same time, the Board will continue to pursue
corporate acquisitions as and when they arise and to fulfil the other elements
of its strategic plan.
The Group has made significant progress with its strategic objectives and
continues to deliver strong cash generation from its significantly enlarged
operations. As a result, the Board is pleased to announce an increased interim
dividend of 6.0p (H1 2023: 4.6p). It will be paid on 4 October 2024 to all
shareholders on the register on 20 September 2024. Our shares will be marked
ex-dividend on 19 September 2024.
Balance Sheet
Due to the acquisitions this year, there have been significant changes to
three lines in the balance sheet over year-end and H1 FY23. The process of
determining the final acquisition values is ongoing and so what follows is
based on the Board's best estimates available at this time.
Intangible assets increased by £138.9m to £183.4m (H1 2023: £44.5m) with
the acquisitions contributing £141m: Belvoir £117.0m and GPEA £24.0m. The
difference being the amortisation charged in the consolidated statement of
comprehensive income since 30 June 2023.
The consideration for Belvoir involved a share for share exchange of £103.5m
which increased the merger reserve to £117m.
Deferred tax increased by £18.0m to £22.7m (H1 2023: £4.7m) due to the
intangible assets acquired with Belvoir contributing £15.0m and GPEA
contributing £4.0m. The difference being the release to the consolidated
statement of comprehensive income since 30 June 2023.
The Group has improved its balance sheet strength since 30 June 2023 with
equity attributable to the owners increasing 276% to £144.0m (H1 2023:
£38.2m).
Cashflow
At an operational level, the Group remains highly cash generative. Cash
generated from operations increased to £3.7m (H1 2023: £3.6m). That
represented a 52% (H1 2023: 68%) conversion of EBITDA into cash generated from
operations. We expect the full year conversion rate to improve as the sums due
from partners are paid and working capital normalises. The Group generated
£11.3m of cash from operations in FY23, 100% conversion of EBITDA, of which
£3.6m was generated in H1 2023.
After the payment of bank interest and corporation tax, net cash generated
from operations reduced by £0.5m to £1.9m (H1 2023: £2.4m).
On 7 March 2024 the Group acquired the entire issued and to be issued share
capital of Belvoir for a net cash consideration of £1.7m. The outflow being
the net of the cash held by Belvoir on completion less the settlement of
Belvoir's outstanding options.
On 31 May 2024 the Group acquired GPEA Limited for £20.0m subject to any
revisions resulting from the completion accounts process. Cash of £15.0m was
paid on completion which after cash acquired netted to £14.3m, as shown in
the consolidated statement of cash flows.
To fund the acquisition of GPEA Ltd and support future growth, the Group
entered into a new debt facility with Barclays Bank Plc for up to £27.0m
(term loan £14.0m; revolving credit facility £8.0m, accordion £5.0m) of
which £15m (term loan of £14.0m repayable over 3 years with extension
options to 5 years plus RCF of £1.0m) was drawn to fund the initial
consideration and £5.0m as short-term support for the integration. At the
period end £20.0m remained drawn.
As a result of agreeing new bank facilities, the remaining £2.5m (H1 2023:
£2.5m) due under the expiring facility was repaid to Barclays.
A special dividend of 2.0pfor FY23 and a final dividend for FY23 of 7.4p were
paid in the period amounting to £5.3m (H1 2023: £4.3m).
Overall, the cash balances of the Group increased by £2.5m to £5.7m (H1
2022: £3.2m).
Liquidity
The Group had a net debt balance of £14.3m at the end of the period (H1 2023:
net cash £0.7m) which would equate to a multiple of 1.0 times annualised H1
2024 adjusted EBITDA.
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Unaudited Unaudited Audited
6 Months Ended 6 Months Ended 12 Months Ended
30.06.24 30.06.23 31.12
.23
£'000 £'000 £'000
Revenue 26,853 13,182 27,278
Cost of sales (8,880) (2,726) (5,400)
GROSS PROFIT 17,973 10,456 21,878
Administrative expenses before exceptional items (10,540) (5,646) (11,831)
Exceptional administrative expenses 4 (2,245) - -
Share-based payments charge (284) (416) (783)
OPERATING PROFIT 4,904 4,394 9,264
Finance income 126 3 20
Finance costs (195) (200) (357)
Other gains and losses - - 87
PROFIT BEFORE INCOME TAX EXPENSE 4,835 4,197 9,014
Income tax expense 5 (1,167) (886) (1,644)
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 3,668 3,311 7,370
PROFIT AND TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the parent 3,681 3,314 7,395
Non-controlling minority interest (13) (3) (25)
3,668 3,311 7,370
6 7.2p 10.3p 23.0p
Earnings per share
attributable to owners of the parent
Diluted earnings per share attributable to owners of the parent 6 7.0p 10.3p 22.0p
Adjusted:
6 15.5p 13.9p 29.7p
Earnings per share attributable to owners of the parent
Diluted earnings per share attributable to owners of the parent 6 15.1p 13.9p 28.4p
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
Unaudited Unaudited Audited
As at 30.06.24 As at 30.06.23 As at 31.12.23
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Intangible assets 10 183,407 44,462 43,757
Property, plant and equipment 802 229 181
Investments - 137 -
Right of use assets 2,278 1,456 1,525
Prepaid assisted acquisitions support 238 266 230
Other Receivables 11 3,135 220 210
189,860 46,770 45,903
CURRENT ASSETS
Trade and other receivables 12,682 4,521 4,134
Cash and cash equivalents 5,698 3,224 7,642
18,380 7,745 11,776
TOTAL ASSETS 208,240 54,515 57,679
ISSUED CAPITAL AND RESERVES
ATTRIBUTABLE TO OWNERS OF PARENT
Share capital 623 320 323
Share premium 4,129 4,129 4,129
Merger reserve 117,497 14,345 14,345
Own share reserve (420) (348) (420)
Retained earnings 19,194 17,906 20,765
Other reserves 2,965 1,851 1,673
143,988 38,203 40,815
NON-CONTROLLING INTEREST (16) 19 (3)
TOTAL EQUITY 143,972 38,222 40,812
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings 8 17,667 - -
Lease liabilities 2,167 1,626 1,647
Provisions 154 181 181
Deferred tax 9 22,689 4,744 4,394
42,677 6,551 6,222
CURRENT LIABILITIES
Borrowings 8 2,333 2,500 2,500
Trade and other payables 16,878 5,432 6,319
Lease liabilities 639 495 395
Tax payable 1,741 1,315 1,431
21,591 9,742 10,645
TOTAL LIABILITIES 64,268 16,293 16,867
TOTAL EQUITY AND LIABILITIES 208,240 54,515 57,679
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Called up share capital Retained earnings Share premium Own share reserve Merger reserve Other reserves Total Non-controlling interest Total
equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 (audited) 320 17,399 4,129 (348) 14,345 1,316 37,161 22 37,183
Profit and total comprehensive income - 3,314 - - - - 3,314 (3) 3,311
Share-based payments charge - - - - - 416 416 - 416
Deferred tax on share-based payments - - - - - 119 119 - 119
Dividends - (2,807) - - - - (2,807) - (2,807)
Total transactions with owners - (2,807) - - - 535 (2,272) - (2,272)
Balance at 30 June 2023 (unaudited) 320 17,906 4,129 (348) 14,345 1,851 38,203 19 38,222
Profit and total comprehensive income - 4,081 - - - - 4,081 (22) 4,059
Share-based payments charge - - - - - 367 367 - 367
Shares issued - share option exercises 3 254 - - - (524) (267) - (267)
Purchase of shares by Employee Benefit Trust - - - (72) - - (72) - (72)
Deferred tax on share-based payments - - - - - (21) (21) - (21)
Dividends - (1,476) - - - - (1,476) - (1,476)
Total transactions with owners 3 (1,222) - (72) - (178) (1,469) - (1,469)
Balance at 31 December 2023 (audited) 323 20,765 4,129 (420) 14,345 1,673 40,815 (3) 40,812
Profit and total comprehensive income - 3,681 - - - - 3,681 (13) 3,668
Share-based payments charge - - - - - 284 284 - 284
Shares issued - acquisition of Belvoir 300 - - - 103,152 - 103,452 - 103,452
Deferred tax on share-based payments - - - - - 1,008 1,008 - 1,008
Dividends - (5,252) - - - - (5,252) - (5,252)
Total transactions with owners 300 (5,252) - - 103,152 1,292 99,492 - 99,492
Balance at 30 June 2024 (unaudited) 623 19,194 4,129 (420) 117,497 2,965 143,988 (16) 143,972
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Unaudited Unaudited Audited
6 Months Ended 6 Months Ended 12 Months Ended
30.06.24 30.06.23 31.12.23
£'000 £'000 £'000
Cash flows from operating activities
Profit before income tax 4,835 4,197 9,014
Depreciation and amortisation charges 2,237 1,036 2,043
Revaluation of investments in shares - - (87)
Share-based payments charge 284 416 783
Profit on disposal of FDGs and rebrands (46) (95) (89)
Finance costs 195 200 357
Finance income (126) (3) (20)
Operating cash flow before changes in working capital 7,379 5,751 12,001
Increase in trade and other receivables (1,402) (783) (319)
Increase / (Decrease) in trade and other payables (2,273) (1,348) (358)
Cash generated from operations 3,704 3,620 11,324
Interest paid (12) (158) (255)
Tax paid (1,761) (1,012) (2,048)
Net cash generated from operations 1,931 2,450 9,021
Cash flows from investing activities
Purchase of Belvoir net of cash acquired (1,730) (202) -
Purchase of GPEA net of cash acquired (14,321) - -
Disposal of investment in shares - - 81
The Mortgage Genie deferred consideration - - (138)
Disposal of intangible assets - FDGs and rebrands 125 54 53
Disposal of intangible assets - Customer lists - - (201)
Purchase of tangible assets (8) (106) (114)
Payment of assisted acquisitions support (95) (67) (115)
Interest received 126 3 20
Net cash used in investing activities (15,903) (318) (414)
Cash flows from financing activities
Issue of ordinary shares - - 3
Equity dividends paid (note 7) (5,252) (2,807) (4,283)
Purchase of shares by Employee Benefit Trust - - (72)
Net settlement of share options - - (270)
Bank loans drawn 20,000 - -
Bank loan repaid (2,500) (2,500) (2,500)
Principal paid on lease liabilities (164) (236) (431)
Interest paid on lease liabilities (56) (49) (96)
Net cash used in financing activities 12,028 (5,592) (7,649)
(Decrease) / Increase in cash and cash equivalents (1,944) (3,460) 958
Cash and cash equivalents at the beginning of the period 7,642 6,684 6,684
Cash and cash equivalents at end of the period 5,698 3,224 7,642
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
1. GENERAL INFORMATION
The principal activity of The Property Franchise Group plc and its
subsidiaries continues to be that of a UK residential property franchise
business. The company is a public limited company incorporated and domiciled
in the UK. The address of its head office and registered office is 2 St
Stephen's Court, St Stephen's Road, Bournemouth, Dorset, BH2 6LA, UK.
2. BASIS OF PREPARATION
The consolidated interim financial information for the six months ended 30
June 2024 was approved by the Board and authorised for issue on 10 September
2024. The results for 30 June 2024 and 30 June 2023 are unaudited. The
disclosed figures are not statutory accounts in terms of Section 435 of the
Companies Act 2006. Statutory accounts for the year ended 31 December 2023 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 UK adopted
international accounting standards and, as regards the Parent Company
financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
This interim report has been prepared on a basis consistent with the
accounting policies expected to be applied for the year ending 31 December
2024 and uses the same accounting policies and methods of computation applied
for the year ended 31 December 2023.
Going concern
When assessing the foreseeable future, the directors have looked at a period
of 12 months from the date of approval of the interim financial information.
The directors have a reasonable expectation that the Group has adequate
resources to continue to trade for the foreseeable future and, therefore,
consider it appropriate to prepare the Group's interim financial information
on a going concern basis.
Significant accounting policies
The Group's interim financial information includes those of the parent company
and its subsidiaries, drawn up to 30 June 2024. Subsidiaries are all entities
over which the Group has control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date that
control ceases.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the Group.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values
at the acquisition date. Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on transactions
between Group companies are eliminated. Unrealised losses are also eliminated.
Where necessary amounts reported by subsidiaries have been adjusted to conform
with the Group's accounting policies.
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
3. SEGMENTAL REPORTING
The directors consider there to be three operating segments being Property
Franchising, Financial Services and Licensing.
For the six months ended 30 June 2024:
Property Financial
Franchising Services Licensing Total
Continuing £'000 £'000 £'000 £'000
Revenue 18,152 7,672 1,029 26,853
Segmental profit before tax 7,384 1,071 225 8,680
PLC central overheads (1,247)
Exceptional administrative expenses (2,245)
Share based payment charge (284)
Finance costs and income (69)
Profit before tax 4,835
For the six months ended 30 June 2023:
Property Financial
Franchising Services Licensing Total
Continuing £'000 £'000 £'000 £'000
Revenue 12,286 896 - 13,182
Segmental profit before tax 5,343 377 - 5,720
PLC central overheads (910)
Share based payment charge (416)
Finance costs and income (197)
Profit before tax 4,197
For the year
ended 31 December 2023:
Property Financial Services
Franchising Licensing Total
Continuing £'000 £'000 £'000 £'000
Revenue 25,776 1,502 - 27,278
Segmental profit before tax 11,880 352 - 12,232
PLC central overheads (2,185)
Share based payment charge (783)
Other gains and losses 87
Finance costs and income (337)
Profit before tax 9,014
There was no inter-segment revenue in any period.
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
4. EXCEPTIONAL COSTS
Exceptional costs relate to costs incurred on the acquisition of Belvoir Group
plc and GPEA Limited.
5. TAXATION
The tax charge is based on the expected effective tax rate for the full year
to December 2024. The tax charge is lower than the standard rate of
corporation tax, the main reason for this is because it includes a credit
arising on the exercise of share options in Belvoir.
6. EARNINGS PER SHARE
Earnings per share is calculated by dividing the profit for the financial
period by the weighted average number of shares during the period.
Unaudited Audited
Unaudited
6 Months Ended 6 Months Ended 12 Months Ended
30.06.24 30.06.23 31.12.23
£'000 £'000 £'000
Profit for the period attributable to owners of parent 3,681 3,314 7,396
Amortisation on acquired intangibles 1,778 721 1,443
Share-based payments charge 284 416 783
Exceptional costs 2,245 - -
Loss on revaluation of listed investments - - (87)
Adjusted profit for the period 7,988 4,451 9,535
Unaudited Audited
Unaudited
6 Months 6 Months Ended 12 Months Ended
Ended
30.06.24 30.06.23 31.12.23
51,422,733 32,041,966 32,142,942
Weighted average number of shares
Dilutive effect of share options on ordinary shares 1,419,871 99,608 1,418,547
52,842,604 32,141,574 33,561,469
Unaudited Audited
Unaudited
6 Months 6 Months Ended 12 Months Ended
Ended
30.06.24 30.06.23 31.12.23
Basic earnings per share 7.2p 10.3p 23.0p
Diluted earnings per share 7.0p 10.3p 22.0p
15.5p 13.9p 29.7p
Adjusted basic earnings per share
Adjusted diluted earnings per share 15.1p 13.9p 28.4p
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
7. DIVIDENDS
Unaudited Unaudited Audited
As at As at As at
30.06.24 30.06.23 31.12.23
£'000 £'000 £'000
Final dividend paid 4,611 2,807 2,807
Dividend per share paid 7.4p 8.8p 8.8p
Interim dividend paid - - 1,476
Dividend per share paid - - 4.6p
Special dividend paid 641 - -
Dividend per share paid 2.0p - -
Total Dividends paid 5,252 2,807 4,283
An interim dividend for 2024 of 6.0p per share has been declared and will be
paid on 4 October 2024 to all shareholders on the register on 20 September
2024. Our shares will be marked ex-dividend on 19 September 2024. The total
amount payable is £3.8m.
8. BORROWINGS
Unaudited Unaudited Audited
6 Months Ended 6 Months Ended 12 Months Ended
30.06.24 30.06.23 31.12.23
£'000 £'000 £'000
Repayable within one year:
Bank loan (revolving credit facility) - 2,500 2,500
Bank loan (term loan) 2,333 - -
Repayable in more than one year:
Bank loan (revolving credit facility) 6,000 - -
Bank loan (term loan) 11,667 - -
On 31 May 2024, the company agreed facilities with Barclays Bank Plc totalling
£27.0m of which £5.0m is an accordion subject to conditions at the time of
requesting its use. This loan facility comprised of a:
Term Loan - £14.0m term loan drawn down on 31 May 2024 and repayable over 3
years with extension options to 5 years. This is currently being repaid over 3
years with quarterly instalments of £777,777 due from 1 November 2024. The
interest rate appliable to the term loan is 2.2% over SONIA
Revolving credit facility ("RCF") - £8.0m was immediately available of which
£1.0m was drawn down on 31 May 2024 and £5.0m was drawn down on 6 June 2024,
with £2.0m remaining unutilised. The interest rate applicable to the RCF is
2.5% over SONIA. There is a non-utilisation rate of 1% on undrawn amounts.
The loans are secured with a fixed and floating charge over the Group's assets
and a cross guarantee over all companies in the Group.
The cash inflow for borrowings arising from financing activities during the
period was £20m.
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
9. DEFERRED TAX
The movement in the deferred tax balance includes deferred tax arising on
business combinations (see note 11 for details) and the release of deferred
tax against the amortisation of acquired intangibles.
10. ACQUISITIONS
Acquisition of Belvoir Group plc
Effective 7 March 2024 the Group acquired the entire issued and to be issued
share capital of Belvoir Group plc, a competitor property franchisor with a
network of over 300 franchised offices across the UK. It operates under 6
brands and also has a significant financial services division comprising a
network of over 300 mortgage advisors. Total consideration was £107.2m, being
£103.5m in relation to a share for share exchange whereby each Belvoir
shareholder was issued 0.806377 new shares in The Property Franchise Group plc
and £3.7m in cash which was used to settle share option obligations.
An exercise is currently being undertaken to allocate the purchase price
between the fair value of intangible assets acquired with the remainder being
recognised as goodwill. The assets acquired are likely to be master franchise
agreements, lettings books and brands.
The value of the intangible assets and goodwill acquired has been estimated at
£117m. Amortisation of £1.0m has been included in these financial
statements for the period from 7 March - 30 June 2024 based on the current
estimate of intangibles acquired. The deferred tax arising on the intangibles
acquired is estimated at £15m. Further details will be included in the
year-end financial statements when the values will have been finalised.
Acquisition of GPEA Limited
On 31 May 2024 the Group acquired the entire issued and to be issued share
capital of GPEA Limited and associated companies, trading as The Guild of
Property Professionals and Fine & Country. Total consideration was
£20.0m, of which £15.0m was paid in cash on acquisition and is subject to
the finalisation of the completion accounts process. There is also deferred
consideration of £5.0m payable on the first anniversary of the date of
acquisition.
An exercise is currently being undertaken to allocate the purchase price
between the fair value of intangible assets acquired with the remainder being
recognised as goodwill. The assets acquired are likely to be master franchise
agreements and brands.
The value of the intangible assets and goodwill acquired has been estimated at
£24m. Amortisation of £0.1m has been included in these financial
statements for the period from 31 May - 30 June 2024 based on the current
estimate of intangibles acquired. The deferred tax arising on the intangibles
acquired is estimated at £4m. Further details will be included in the
year-end financial statements when the values will have been finalised.
11. OTHER RECEIVABLES
Other non-current receivables comprise outstanding loans advanced to
franchisees.
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