Interim Results for Six Months Ended 31 July 2022
13/10/2022 07:00
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RNS Number : 7057C OnTheMarket plc 13 October 2022
13 October 2022
ONTHEMARKET PLC
("OnTheMarket", "OTM", the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 JULY 2022
FURTHER STRATEGIC PROGRESS DRIVING CONTINUED REVENUE GROWTH
OnTheMarket plc (AIM: OTMP), the majority agent-owned company which operates
the OnTheMarket.com property portal, today announces its unaudited interim
results for the six months ended 31 July 2022 ("H1 22/23").
Highlights
Period ended 31 July 2022 2021 Change
Group revenue £17.0m £14.9m 14%
Adjusted operating profit(1) £1.3m £2.1m (38)%
Operating profit £0.1m £0.0m n/a
Profit after tax £0.4m £0.5m (20)%
Period-end net cash £8.7m £8.4(2)m 3.6%
ARPA(3) £205 £188 9%
Average monthly advertisers(4) listed 13,118 12,972 1%
Period-end advertisers 12,876 13,732(5) (6)%
Period-end agency branches 10,460 11,451(5) (9)%
Period-end new homes developments 2,416 2,281(5) 6%
Traffic/visits(6) 138m 124(7)m 11%
Average monthly leads per advertiser 107 101(7) 6%
Good financial performance
● Continued strong growth in revenue and ARPA, up 14% and 9%
respectively.
● Strong growth in New Homes revenues, up 73% and boosted by
increases in both advertiser numbers and ARPA.
● After planned strategic investments in marketing and the team, the
Group continues to be profitable with adjusted operating profit of £1.3m.
● Strong balance sheet, with H1 22/23 cash generated from operating
activities of £3.1m. Period-end net cash increased to £8.7m, with no
borrowings (31 January 2022: £8.4m).
Further strategic and operational progress
● Renewal of contracts with high-profile agency customers who
committed to 5-year agreements on our admission to AIM in February 2018,
demonstrating the value of our proposition and confidence in OnTheMarket.
Further details are contained in a separate announcement released today.
● In July 2022 Foxtons, one of London's leading estate agencies with
more than 50 interconnected branches, signed a listing agreement with
OnTheMarket.
● After the period end, in August 2022, Lomond Group, the
fast-growing network of sales and lettings businesses with over 60 branches,
also signed a listing agreement with us.
● Glanty, relaunched as OnTheMarket Software, launched new products
including TecCRM, the first majority agent owned CRM delivering an end-to-end
customer relationship management solution.
● Our focus on serious property seekers continued, with valuation
leads up 69% versus H1 21/22.
● Traffic and average monthly leads per advertiser increased
relative to the preceding 6 months to 31 January 2022, up 11% and 6%
respectively.
● 73% increase in agency spend on additional products reflecting
increased value provided and demonstrating progress against the Group's growth
strategy to add value through products, services and partnerships.
● Average monthly advertisers listed were up 1% period on period,
with period end agency branches down 9% from 31 January 2022, reflecting
fluctuations in agency branches under short-term free of charge trial periods.
● Period end new homes developments listed have increased 6% since
31 January 2022.
Outlook: well-positioned in the current market, confident in full year
expectations
● The current macro-economic and geopolitical backdrop remains
uncertain. Despite this, HMRC data shows that the UK housing market has seen
normal transactional numbers in the past six months. In this context, our
customers are looking for value-for-money advertising to generate valuable
leads together with technology solutions that provide the most value and
support them in winning new instructions and interacting with buyers, sellers,
tenants and landlords.
● The Group's revenues are derived from contractual listing
agreements and OnTheMarket offers a clear and valued proposition for agents
and housebuilders, providing high quality leads and valuation instructions at
sustainably competitive prices, in addition to a number of other value-adding
products and services. Accordingly, the Board believes OnTheMarket is well
positioned to support their business activities and help customers succeed
throughout economic cycles.
● The Board remains confident in the Group meeting its full year
expectations. The Group has continued to trade well and expects revenue
growth, strategic progress and operational discipline to continue, with full
year adjusted operating profit weighted towards H2 22/23 as revenue growth,
including from existing and newly launched products, combined with a largely
fixed cost base, contribute to increased operating margins.
● With a continuing commitment to "Listening, innovating,
delivering", ever expanding engagement with our customers and a strong
pipeline of additional products and services planned, the Group is confident
it has a platform from which to drive long-term profitable growth.
Jason Tebb, Chief Executive Officer of OnTheMarket, commented:
"We have a clear strategy in place to build a tech-enabled property business,
a "one stop shop" for agents and we are delivering. Our continued operational
and strategic progress is evidenced by our good set of results and the belief
shown in us by agent customers who have committed their long-term futures to
OnTheMarket.
Our momentum is building. OnTheMarket is better placed today than ever to be
the partner of choice for our agents to navigate all market conditions. We
continue to offer exceptional value, as well as an increasing range of
products and services, that help our customers win instructions, sell or let
properties, make efficiency and cost savings and earn incremental revenues.
The value and breadth of our products and services are key to retaining and
growing our share of customer spend.
Underpinning our confidence in the future is the continued support of our
agent customers, evidenced by our contract renewals and our role as the
'agents' portal', our New Homes customers and our consumers, who have
responded very positively to the changes we have made. We have a strong
pipeline of customer and consumer-led new products and services which will
also further differentiate our proposition."
Analyst and investor presentations
A presentation for analysts will be held at 9.00am today. Please contact
OTM@tulchangroup.com for further information.
The Company will also be hosting a live presentation for all existing and
potential shareholders via the Investor Meet Company platform at 5pm BST on 18
October 2022. Full details of this session will be included in a separate
announcement to be released shortly after these interim results are published.
Footnotes
1) Adjusted operating profit is defined as operating profit before
share-based payments (including charges relating to shares issued for agent
recruitment), specific professional fees and non-recurring items. This is an
alternative performance measure and should not be considered an alternative to
IFRS measures, such as revenue or operating profit. Please see the Financial
Review and Key Performance Indicators section below for a reconciliation of
operating profit to adjusted operating profit.
2) Period-end net cash in the 2021 column is net cash at 31 January
2022. Net cash at 31 July 2021 was £9.9m.
3) Average revenue per property advertiser, being revenues due from
property advertisers before the deduction of non-cash share-based agent
recruitment charges for a period divided by the number of property advertisers
for that period. ARPA presented herein is the average of the monthly ARPAs for
the period unless otherwise stated. A property advertiser is a listed agency
branch or a new home development advertising on OnTheMarket.com.
4) Advertisers are either estate and lettings agent branches or new home
developments listed at OnTheMarket.com.
5) Period-end figures in the 2021 column are at 31 January 2022.
Advertisers, agency branches and new home developments as at 31 July 2021 were
13,362, 11,198 and 2,164 respectively.
6) Visits comprise individual sessions on OnTheMarket's web-based portal
or mobile applications by users for the period indicated as measured by Google
Analytics.
7) Figures in the 2021 column are for the 6 months to 31 January 2022.
Visits and average monthly leads per advertiser in the 6 months to 31 July
2021 were 159m and 132 respectively.
8) Unless otherwise stated, all figures refer to the six months ended 31
July 2022 and comparative figures are for the six months ended 31 July 2021
("H1 21/22").
For further information, please contact:
OnTheMarket 0207 353 4200
Jason Tebb, Chief Executive Officer
Clive Beattie, Chief Financial Officer
Tulchan Communications (Financial PR Adviser) 0207 353 4200
Giles Kernick onthemarket@tulchangroup.com (mailto:onthemarket@tulchangroup.com)
Alec Tidbury
Zeus Capital (Nominated Adviser/Joint Broker)
Jamie Peel, Martin Green, James Hornigold 0203 829 5000
(Investment Banking)
Benjamin Robertson (Corporate Broking)
Shore Capital (Joint Broker)
Daniel Bush, John More (Corporate Finance) 0207 408 4090
Fiona Conroy (Corporate Broking)
Background on OnTheMarket:
OnTheMarket plc, the majority agent-owned company which operates the
OnTheMarket.com property portal, is a leading UK residential property portal
provider.
Its objective is to create value for shareholders and property advertiser
customers by delivering an agent-backed, technology-enabled portal - offering
a first-class service to agents and new homes developers at sustainably fair
prices and becoming the go-to portal for serious property-seekers.
OnTheMarket provides a unique opportunity for agents to participate in the
equity value of their own portal. Agent backing and support enable OnTheMarket
to display "New & Exclusive" properties to serious property-seekers 24
hours or more before agents release these properties to other portals.
This announcement contains forward-looking statements that are based on
current expectations or beliefs, as well as assumptions about future events.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward-looking statements
often use words such as anticipate, target, expect, estimate, intend, plan,
goal, believe, will, may, should, would, could, is confident, or other words
of similar meaning. Undue reliance should not be placed on any such statements
because they speak only as at the date of this document and, by their very
nature, they are subject to known and unknown risks and uncertainties and can
be affected by other factors that could cause actual results, plans and
objectives to differ materially from those expressed or implied in the
forward-looking statements. There are a number of factors which could cause
actual results to differ materially from those expressed or implied in
forward-looking statements. The Group undertakes no obligation to revise or
update any forward-looking statement contained within this announcement,
regardless of whether those statements are affected as a result of new
information, future events or otherwise, save as required by law and
regulations.
Chief Executive Officer's Report
Success of strategy delivering good financial performance
The period to 31 July 2022 saw us build on the encouraging results we released
for FY22 and I'm delighted to report continued progress in our long-term aim
to become a tech-enabled property business within the entire property
ecosystem. Our strategy is working. As one the 100 most visited websites in
the UK (source: similarweb), we are well positioned to offer increasing levels
of value to our customers, providing them with products and services that they
need in addition to our core property portal offering.
The first half of our year has seen a continuation of our growth and
significant steps forward for our business with revenue and ARPA up 14% and 9%
respectively.
We continued to adopt a more proactive marketing strategy which has delivered
more valuation opportunities for agent customers. In addition, we are
developing new and innovative ways to provide high quality, qualified and
nurtured leads to our customers which are of increasing importance.
We are pleased to report that spend on products in addition to fees for
property listing services by our agent customers has increased by 73%
period-on-period. This reflects our strategy of sustainably fair pricing, with
an increasing range of value-add products and services for our customers.
Further operational and strategic progress; Listening. Innovating.
Delivering.
Our commitment to both our customers and property-seeking consumers is
underpinned by our four pillars: portal, software, data and market
intelligence, and communications and marketing. We remain committed to a
roadmap that combines 'good old-fashioned' agency principles with modern
technological solutions, partnering with our agent and homebuilder customers
to understand their needs.
The period saw us continue our focus on generating valuation leads for
advertisers, a key priority identified from our 'Listening tour' of Town Halls
and engagement sessions. At the core of this was a new TV creative with a
focus on calls to action amongst serious property seekers, encouraging site
visitors to generate a valuation. Valuation leads generated increased 69% in
the 6 months to 31 July 2022 versus the six months to 31 July 2021.
Throughout the period, work continued apace on the development of "OnTheMarket
2.1", a significant upgrade to our site with new features and functionality
designed in partnership with our customers. Released after period end, the
upgrades included but were not limited to "Express Appraisal" and "Video
Appraisal", two new innovations designed to generate new valuation
opportunities and give agents additional ways to engage with potential new
clients. These upgrades will enhance the quality of our lead generation
offering to agents. "2.1" also includes a whole host of new filters and search
options such as "auction, pet-friendly, greener choice, accessible, reduced
price and student homes''. An integration with WhatsApp was also included.
Additionally, rewarding our full-rate tariff agents, we have released updated
agent profile pages with a display featuring awards, testimonials, area
information and office hours.
In July 2022 we launched an exclusive commercial partnership with Instant
Offices, a world leading marketplace for flexible workspace, providing
thousands more office space listings on our portal. The move to increase
flexible office space listings forms the core part of a strategic push to
expand our portal offering. Updated functionality will launch later this year
to include a new 'Flexible Workspace' filter for site visitors.
Also in July 2022, we announced a new Management Fee product to protect
lettings agents against lost management fees. Developed with tenant
referencing platform Canopy and sold by insurance broker the Alan Boswell
Group, the product provides up to 15 months of cover for the loss of
management fees and up to £100,000 of legal expenses, including the cost of
eviction process.
The launch of OnTheMarket Software, formerly known as Glanty Limited
("Glanty"), is a major step forward for our business. As the only majority
agent owned CRM software, TecCRM will deliver an end-to-end customer
relationship management solution. TecLet, TecHub and TecWeb will offer further
software solutions to our customers and will in the future integrate
seamlessly with the OnTheMarket portal.
In January we extended our partnership with data specialists Sprift,
announcing exclusive access for our agents and housebuilder customers to
Sprift's prospecting tool, Smartmail. A full-service canvassing and
prospecting system that enables multi-trigger mailings to be sent to targeted
properties, Smartmail is a key product designed to help agent customers in a
low-stock market. In April we enhanced the product to include landlord
prospecting, catering to a core priority for our letting agents in a low-stock
market.
In March we entered a long-term agreement with Estate Agency Events to be the
Principal Partner of the leading event and awards in our industry, the EA
Masters and Best Estate Agent Guide and Awards. Our partnership will see us
working together to build on the considerable reputation both EA Masters and
Best Estate Agent Guide have earned. In line with us becoming the new
Principal Partner, we are providing our full-rate paying member agents with
special benefits, including preferential rates to attend the events, and
supporting them in learning from some of the best business minds and leaders
in the industry through a series of free masterclasses.
I am excited about the next steps planned for this year, with significant site
upgrades including the recently launched "OnTheMarket 2.1" and work beginning
on "2.2", both of which are tailored to both serious property seekers and our
agents' and homebuilder customers' needs. We are now 'more than just a
portal', with a suite of products, services and functionality designed to help
our customers run their businesses more easily, quickly and cost effectively,
as well as helping property seekers get an advantage in their property search.
The agents' portal
We are delivering on our strategy of creating a tech-enabled property
business. As part of this I have always stated that I wanted to build the
portal and the software that I always wanted when I was an estate agent, but
didn't have. This fundamental understanding of our customers, combined with
feedback taken on board from across our agent community since joining the
business, powers our strategy, and we will continue to evolve our products and
services based on offering incredible value for money and sustainably fair
pricing. But we are only just getting started, there is much more to come.
I cannot overstate the importance of the growing positive sentiment towards
the business from its core customer base. In a survey of long-term full rate
paying customers, 81% reported that OnTheMarket has made progress over the
last 2 years. This sentiment is further supported by the ongoing engagement
initiatives, where our customers have had their voice heard and have had the
opportunity to shape the future of the agents' portal. We have spoken with
thousands of agents over the course of the last year through our Town Halls,
beta sessions, developer forums and 1-1 clinics. I would like to thank all
those with whom we've spoken for giving up their time to provide feedback and
help to shape the future of the business.
Reflecting our position as the agents' portal, we are delighted that many
leading agency brands have committed to new contracts, demonstrating the value
of our proposition and confidence in OnTheMarket. We are also delighted to
welcome Lomond Group, a fast-growing business of over 60 branches, who has
signed a listing agreement with OnTheMarket. Further details on these
developments are contained in a separate announcement released today.
None of this would be possible without the hard work and enthusiasm of my
colleagues. I thank all of them and look forward to working with them on these
exciting plans for the rest of 2022.
Continuing commitment to ESG
OnTheMarket is committed to being a responsible corporate citizen, delivering
long-term, sustainable results for our stakeholders whilst reducing our impact
on the environment. Working with external climate consultants, we have
benchmarked our carbon footprint. This data is informing our immediate and
future decisions and we are committed to understanding our impact in terms of
carbon emissions. An ESG strategy and framework will underpin this with clear
goals and structures. We will provide more details in due course.
Board
On 1 August 2022 the Group announced the resignation of Clive Beattie, Chief
Financial Officer ("CFO"). The Board has appointed Korn Ferry, an
organisational consulting firm, to conduct a formal recruitment process for a
permanent replacement. A list of potential candidates has been drawn up and
interviews have commenced. Clive will remain with OnTheMarket as CFO and a
board director until Friday 27 January 2023 to ensure an orderly handover.
Further updates will be given when appropriate.
Well positioned in the current market
The current macro-economic and geopolitical backdrop remains uncertain.
According to our data, there are more properties available than at any time
over the past 18 months, meaning a continuation of the inevitable levelling
off of house price growth. Despite this, HMRC data shows that the UK housing
market has seen normal transactional numbers in the past six months. With
substantial pipelines built up over H1, agents will be keen to convert these
to completed transactions as well as build for the future. Anecdotally, agents
and house builders are reporting fewer buyers than in the first 6 months of
the year, but activity is still high with 53% of properties selling (subject
to contract) within 30 days according to our own Property Sentiment Index.
Continued softening of house price growth and more supply coming to the market
may lead to a re-balancing of the market in the next six months. In this
context, our customers are looking for value-for-money advertising to generate
valuable leads, together with technology solutions that provide the most value
and support them in winning new instructions and interacting with buyers,
sellers, tenants and landlords.
Our focus therefore remains firmly on providing our customers with increasing
value for money across the services we provide to support their business
activities in all market conditions, and providing consumers a first-class,
market leading experience in their property search. Our revenues, derived from
contractual listing agreements, in addition to a number of other value-adding
products and services, are not directly linked to property market transaction
activity. We believe that the value and competitive advantage OnTheMarket
brings to agent and New Homes customers is becoming increasingly clear, and
OnTheMarket's proposition is well positioned to support agents throughout
economic cycles.
Serious property seekers are part of our DNA. The latest OnTheMarket property
sentiment index shows that 75% of active buyers who visit OnTheMarket.com are
confident that they would purchase a property within the next 3 months and
that 80% of sellers were confident that they would sell in the next 3 months.
Positive outlook remains
Our transformation to a tech-enabled property business across the broader
property ecosystem is accelerating and our momentum is building.
The Board remains confident in the Group meeting its full year expectations.
The Group has continued to trade well and expects revenue growth, strategic
progress and operational discipline to continue, with full year adjusted
operating profit weighted towards H2 22/23 as revenue growth, including from
existing and newly launched products, combined with a largely fixed cost base,
contribute to increased operating margins.
With a company culture committed to "Listening, innovating, delivering", ever
expanding engagement with our customers and a strong pipeline of product
delivery planned for the second half of the year, we are confident that we
have a platform from which to drive long-term profitable growth. I am grateful
to my colleagues for their enthusiasm and energy in achieving these results
and look forward to our continued progress.
Finally, I would like to thank our agent and homebuilder customers for their
ongoing engagement and continued support, without which none of the above
would have been possible.
Jason Tebb
Chief Executive Officer
Financial Review and Key Performance Indicators
Financial review
Revenue for the period was up 14% to £17.0m (H1 21/22: £14.9m), including
Glanty revenues of £0.5m (H1 21/22: £0.1m representing a one-month
contribution as the acquisition date was 28 May 2021).
The reported operating profit of the Group was £0.1m (H1 21/22: £0.0m). This
includes an operating loss of £0.6m (H1 21/22: loss of £0.1m) attributable
to Glanty and is further analysed as follows:
H1 22/23 H1 21/22
£'000 £'000
Reconciliation of operating profit to adjusted operating profit:
Operating profit 54 13
Adjustments for:
Share-based employee incentives 205 174
Professional fees 15 164
Share-based agent recruitment charges 790 1,214
Government grant repaid - 449
Staff related costs 29 95
Acquisition related costs 97 -
_________ _________
Operating profit before specific professional 1,190 2,109
fees, share-based payments and non-recurring _________ _________
items
Non-cash agent recruitment charges within revenues 108 -
_________ _________
Adjusted operating profit 1,298 2,109
_________ _________
The basic and diluted profit per share in the period were 0.49p and 0.44p
respectively (H1 21/22: basic and diluted profit per share 0.66p and 0.60p
respectively).
The Group ended the period with cash of £8.7m and no borrowings (31 January
2022: £8.4m).
Revenue and ARPA by source
Following the acquisition of Glanty in May 2021 the Group reports revenues
attributable to products and services offered to:
● estate and letting agents;
● new home developers;
● Glanty customers; and
● other, non-property advertiser customers.
Period ended 31 July 2022 2021 Change
Group revenue
- Agency £14.4m £13.5m 7%
- New Homes £1.9m £1.1m 73%
- Other advertisers £0.2m £0.2m N/a
- Glanty £0.5m £0.1m 400%
________ ________ ________
Total £17.0m £14.9m 14%
ARPA
- Group £205 £188 9%
- Agency £222 £207 7%
- New Homes £129 £92 40%
Operational KPIs
Group operational KPIs were as follows:
31 July 31 January 2022 Change
2022
Average advertisers
- Group 13,118 12,972 1%
- Agency 10,720 10,900 (2)%
- New Homes 2,398 2,072 16%
Total advertisers 12,876 13,732 (6)%
- Agency branches 10,460 11,451 (9)%
- New homes developments 2,416 2,281 6%
● Average monthly advertisers listed were up 1% period on period.
Period end agency branches fell 9% from 31 January 2022, reflecting
fluctuations in agency branches under short-term free of charge trial periods.
Since 31 January 2022, new homes developments listed have increased further,
up 6%.
● Traffic and average monthly leads per advertiser fell versus H1
21/22, reflecting significant activity in the UK residential property market
in late 2020 and 2021. However, our focus on serious property seekers
continued, with valuation leads up 69% versus H1 21/22 and 18% versus H2
21/22.
The Group's financial performance is presented in the Condensed Consolidated
Income Statement below. The profit for the period attributable to the owners
of the Group was £0.4m (H1 21/22: £0.5m).
Administrative expenses have increased by £3.0m to £15.8m in the period to
31 July 2022 (H1 21/22: £12.8m). This was driven by an increase in staff
costs of £1.1m to £5.8m (H1 21/22: £4.7m) and marketing expenditure of
£0.8m to £5.3m (H1 21/22: £4.5m). The increase in staff costs was in part
driven by the inclusion of a full period of staff costs in relation to Glanty.
There was also an increase in other Glanty costs of £0.4m to £0.5m (H1
21/22: £0.1m) because of Glanty costs being included for the full period in
H1 22/ 23 compared to only two months in H1 21/22.
A charge of £0.2m (H1 21/22: £0.2m) was incurred in relation to share-based
employee incentives and the movement in the expected future employer's
national insurance charge based on the period-end share price.
A share-based agent recruitment charge of £0.8m (H1 21/22: £1.2m) was
incurred in relation to the issue, or expected issue, of shares to agents
alongside signing new long-term listing agreements, in line with the Group's
strategy to grow the agent shareholder base.
Intangible assets increased to £8.3m (31 January 2022: £7.5m). This was
driven by additional capitalisation of staff and consultant costs incurred in
ongoing product development, partially offset by the amortisation charge
arising on those costs and on costs previously capitalised.
Goodwill remained at £1.5m within the Group as a result of the acquisition of
Glanty in the prior year. Goodwill represents the excess of the fair value of
Glanty's purchase consideration over Glanty's net fair value of identifiable
assets and liabilities acquired and no impairment has been recognised.
The deferred tax asset increased from £2.6m (at 31 January 2022) to £2.9m,
due to an increase in the level of future taxable profits expected to arise
and against which available tax losses could be utilised.
Receivables fell to £4.5m as at 31 July 2022 (31 January 2022: £5.1m),
mainly as a result of the release in the period of prepayments previously
recognised for agent shares issued.
Trade and other payables has remained at £5.6m as at 31 July 2022 (31 January
2022: £5.6m).
At 31 July 2022, the Statement of Financial Position showed total assets of
£26.9m, up from £26.4m as at 31 January 2022, primarily due to an increase
in capitalisation of intangible assets. Total equity was £19.5m at 31 July
2022, up from £18.7m as at 31 January 2022, which reflects the profit in the
period and the issue of shares.
Following approval from shareholders and the courts, on 23 July 2022 the
cancellation of the Company's share premium account became effective. The
share premium account was therefore nil at 31 July 2022 (31 January 2022:
£43.8m), and retained earnings were increased by £43.8m. See note 12 for
further information.
Condensed Consolidated Income Statement
For the period ended 31 July 2022
Unaudited Unaudited
6 months to 6 months to
31 July 31 July
2022 2021
Notes £'000 £'000
Revenue 6 16,982 14,947
Administrative expenses (15,792) (12,838)
________ ________
Operating profit before specific professional fees, 1,190 2,109
share-based payments and non-recurring items
________ ________
Specific professional fees, share-based payments 8 (1,136) (2,096)
and non-recurring items:
________ ________
Operating profit 54 13
Finance income 29 12
Finance expense (8) (2)
Share of loss of associate - (104)
Fair value gain on step acquisition - 126
________ ________
Profit before income tax 75 45
Income tax 291 440
________ ________
Profit and total comprehensive income
for the period attributable to owners of the parent 366 485
________ ________
Profit per share from continuing
operations Pence Pence
Basic 9 0.49 0.66
Diluted 9 0.44 0.60
The operating profit arises from the Group's continuing operations.
There is no recognised income or expense for the period other than the profit
shown above and therefore no separate statement of other comprehensive income
has been presented.
Condensed Consolidated Statement of Financial Position
Unaudited Audited at
at 31 July 31 January 2022
2022
Notes £'000 £'000
ASSETS
Non-current assets
Goodwill 10 1,518 1,518
Intangible assets 11 8,276 7,520
Property, plant and equipment 115 96
Right-of-use assets 417 703
Investments 405 405
Deferred tax asset 2,878 2,599
_________ _________
13,609 12,841
Current assets
Trade and other receivables 4,464 5,085
Cash and cash equivalents 8,685 8,412
_________ _________
13,149 13,497
_________ _________
TOTAL ASSETS 26,758 26,338
_________ _________
LIABILITIES
Current liabilities
Trade and other payables (5,587) (5,580)
Lease liabilities (219) (421)
Provisions (914) (732)
Current tax (12) (12)
_________ _________
(6,732) (6,745)
Non-current liabilities
Lease liabilities (162) (237)
Provisions - (203)
Deferred consideration (75) (75)
Deferred tax liability (401) (401)
_________ _________
(638) (916)
_________ _________
TOTAL LIABILITIES (7,370) (7,661)
_________ _________
NET ASSETS 19,388 18,677
EQUITY ATTRIBUTABLE TO OWNERS OF
THE PARENT
Share capital 150 149
Share premium 12 - 43,756
Merger reserve 1,228 1,228
Other reserve 4,592 4,473
Retained earnings 13,418 (30,929)
_________ _________
TOTAL EQUITY ATTRIBUTABLE TO OWNERS
OF THE PARENT 19,388 18,677
Condensed Consolidated Statement of Changes in Equity
For the period ended 31 July 2022
Share capital £'000 Share premium £'000 Other reserve £'000 Merger reserve £'000 Retained earnings £'000 Total equity £'000
Balance as at 145
1 February 2021 47,453 782 (71) (31,409) 16,900
Profit for the financial period - - - - 485 485
_____ _____ _____ _____ _____ _____
Total comprehensive income for the period - - - - 485 485
Transactions with owners:
Share consideration for Glanty Limited 4 1,227 - - - 1,231
Costs incurred in issue of shares relating to Glanty (70) (70)
Shares issued for agent recruitment shares - 185 9 - - 194
Transfer to retained earnings of share-based payment charge on employee - - - - 167 167
options
_____ _____ _____ _____ _____ _____
Balance as at 31 July 2021
149 48,795 791 (71) (30,757) 18,907
____ ____ ____ ____ ____ ____
Balance as at
1 February 2022 149 43,756 4,473 1,228 (30,929) 18,677
Profit for the financial period
- - - - 366 366
_____ _____ _____ _____ _____ _____
Total comprehensive income for the period
- - - - 366 366
Transactions with owners:
Shares issued for agent recruitment shares 1 - 119 - - 120
Transfer to retained earnings of share-based payment charge on employee - - - - 225 225
options
Share premium cancellation - (43,756) - - 43,756 -
_____ _____ _____ _____ _____ _____
Balance as at 31 July 2022 150 - 4,592 1,228 13,418 19,388
_____ _____ _____ _____ _____ _____
Condensed Consolidated Statement of Cash Flows
For the period ended 31 July 2022
Unaudited 6 months to 31 July 2022 Unaudited
£'000 6 months
to 31 July
2021
£'000
Cash flows from operating activities
Profit for the period after income tax 366 485
Adjustments for:
Income tax (291) (440)
Finance income (29) (12)
Finance expense 8 2
Agent recruitment expense 898 1,214
Share-based payment 205 174
Amortisation 1,476 1,154
Depreciation 317 282
Acquisition related costs 97 -
Other professional fees 44 -
Fair value gain on step acquisition - (126)
Share of loss of associate - 104
________ ________
Operating cash flows before movements in working capital 3,091 2,837
(Increase)/ Decrease in trade and other receivables (94) 37
Increase/ (Decrease) in trade and other payables (101) (250)
(Decrease) in provisions (3) (11)
Tax received 12 -
________ ________
Net cash generated from operating activities 2,905 2,613
Cash flows from investing activities
Finance income received 29 12
Acquisition of intangible assets (2,232) (1,509)
Acquisition of property, plant and equipment (51) (20)
Acquisition of associate - -
Acquisition of subsidiary net of cash acquired - (1,562)
________ ________
Net cash used in investing activities (2,254) (3,079)
Cash flows from financing activities
Finance expense paid - (2)
Professional fees incurred (99) -
Loan repayments - (50)
Repayment of lease liabilities (279) (289)
________ ________
Net cash used in financing activities (378) (341)
________ ________
Net movement in cash and cash equivalents 273 (807)
Cash and cash equivalents at the beginning of the period 8,412 10,719
________ ________
Cash and cash equivalents at the end of the period 8,685 9,912
________ ________
Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents
comprise cash at bank and in hand. This is consistent with the presentation in
the Statement of Financial Position.
Notes to the Condensed Consolidated Financial Statements
For the period ended 31 July 2022
1. General information
The principal activity of the Company is that of a holding company. The
principal activities of the Group in the period under review were the
provision of online property portal services to businesses in the estate and
lettings agency industry under the trading name of OnTheMarket.com, and the
provision of software services to UK estate and lettings agents by Glanty
under the trading name teclet.
The Company is a public company limited by shares and it is incorporated and
domiciled in the UK. The address of its registered office is PO Box 450,
155-157 High Street, Aldershot, GU11 9FZ. Its shares are listed on AIM.
2. Significant changes in the current reporting period
No significant changes were noted in the current reporting period.
3. Basis of preparation of half-year report
The interim results for the six months ended 31 July 2022 should be read in
conjunction with the Group's last annual consolidated financial statements as
at and for the year ended 31 January 2022. These condensed interim financial
statements have been prepared in accordance with the recognition and
measurement requirements of UK-adopted International Accounting Standards
(UK-IAS) and adopting the accounting policies that will be applied in the 31
January 2023 financial statements, but do not contain all the disclosures
required for full compliance with UK-IAS. However, selected explanatory
notes are included to explain events and transactions that are significant to
an understanding of the changes in the Group's financial position and
performance since the last annual financial statements.
The 31 January 2022 full year accounts have been reported on by the Group's
auditors and delivered to the Registrar of Companies. The auditors' report
was unqualified and did not contain any statements under section 498 (2) or
(3) of the Companies Act 2006 or any matter to which the auditors drew
attention by way of emphasis.
The interim financial statements were approved by the board of directors on 12
October 2022. The interim results do not constitute statutory financial
statements within the meaning of section 434 of the Companies Act 2006. The
half year results for the current period are unaudited.
4. Accounting policies
The same accounting policies, presentation and methods of computation are
followed in these interim condensed set of financial statements as have been
applied in the Group's latest annual audited financial statements.
5. Going concern
The Group made a profit after tax for the period ended 31 July 2022 of £0.4m
(6 months to 31 July 2021: £0.5m). The Group had a period end net cash
balance of £8.7m and no borrowings (31 January 2022: £8.4m). At 30 September
2022 the Group had a net cash balance of £7.9m and no borrowings.
The Directors have prepared and reviewed cash forecasts and projections for
the Group for the next 12 months. They have also conducted sensitivity
analyses and considered scenarios where there is an adverse impact on future
revenues, together with the mitigating actions they may take in such
circumstances, such as a reduction in budgeted discretionary expenditure, a
significant proportion of which relates to advertising and marketing cost that
can be reduced materially at short notice.
The Directors are confident that the Group will remain cash positive and will
have sufficient funds to continue to meet its liabilities as they fall due for
a period of at least a period of 12 months from the date of the half year
announcement and have therefore prepared the half year announcement on a going
concern basis.
5. Judgement and Estimates
There are no new judgements estimates in respect of the six months to 31 July
2022 apart from the removal of Business Combinations as a key source of
estimation which only related to the Glanty acquisition in FY22.
6. Revenue by source
The Group has determined that the Chief Executive Officer ("CEO") is the chief
operating decision maker. Monthly management numbers are reported and issued
to the CEO, which are used to assess the performance of the business.
Following the acquisition of Glanty Limited in May 2021, the Group reports
revenues attributable to products and services offered to:
● estate and letting agents;
● new home developers;
● other, non-property advertiser customers; and
● Glanty customers.
Period ended 31 July 2022 2021 Change
£m £m
Group revenue
- Agency 14.4 13.5 7%
- New Homes 1.9 1.1 73%
- Other advertisers 0.2 0.2 N/A
- Glanty 0.5 0.1 400%
________ ________
Total 17.0 14.9 14%
Agency Sales are predominantly billed monthly in advance, and these are
recognised as deferred income. The Group has contract liabilities as follows
in respect of deferred income:
Deferred income as at 31 July 2022 31 January 2021 Change
£m £m
Group revenue
- Agency 1.8 1.7 6%
- New homes - - N/a
- Glanty - - N/a
- Other - - N/a
- Total 1.8 1.7 6%
Contract liabilities of £1.7m at 31 January 2022 were recognised as revenue
in the half year ended 31 July 2022 (2021: £1.8m).
A proportion of sales in the period are billed monthly in arrears and are
recognised as accrued income. Accrued income amounted to £0.2m for the year
ended 31 July 2022 (2021: £0.1m).
All revenue is generated in the UK for the Group's services.
During the period there was a charge of £0.1m to revenue in relation to
shares that are issued after the completion of contract commitments. These are
amounts that are initially accrued during the life of the contract and the
accrual released and other reserves credited upon issue of the shares. Amounts
are accrued and deducted against revenue over the period in which the fees are
earned.
7. Operating Segments
The Group determines and presents operating segments based on internal
information that is provided to the Chief Executive Officer, who is the
Group's chief operating decision maker.
The Group's reportable segments are as follows:
● Glanty
● Rest of the Group
Management monitors the business segments at a revenue and operating profit
level separately for the purpose of making decisions about resources to be
allocated and of assessing performance. There was no inter-segment revenue
during the period.
Costs, assets and liabilities are not attributed to the different revenue
sources other than for Glanty and so segmental reporting under IFRS 8 is not
appropriate for the remainder of the Group.
No customer made up more than 10% of Group revenues in the current or prior
years.
Operating profit in relation to the Rest of the Group segment is managed
together and as there are no internal measures of individual segment
profitability, relevant disclosures have been shown under the heading Rest of
the Group in the table below.
6 months ended 31 July 2022 Glanty Rest of the Group Group
£m £m £m
Revenue 0.5 16.5 17.0
Operating loss(1) (0.6) 0.7 0.1
Depreciation & amortisation 0.2 1.6 1.8
6 months ended 31 July 2021 Glanty Rest of the Group Group
£m £m £m
Revenue 0.1 14.8 14.9
Operating loss(1) (0.1) 0.1 0.0
Depreciation & amortisation 0.0 1.4 1.4
(1) Operating loss is stated after the charge for depreciation and
amortisation.
(2) Assets and liabilities are not separately monitored by the Chief Operating
Decision Maker and therefore not identified above.
8. Specific professional fees, share-based payments and
non-recurring items
Profit for the half-year includes the following costs in relation to specific
professional fees, share-based payments and one-off events that are not
expected to be recurring:
Unaudited Unaudited
6 months to 31 July 6 months to 31 July
2022 2021
£'000 £'000
Share-based employee incentives 205 174
Professional fees 15 164
Share-based agent recruitment charges 790 1,214
Government grant repaid - 449
Staff related costs 29 95
Prepayment for employee services 97 -
________ ________
1,136 2,096
Share-based employee incentive charges include the movement in the expected
future employers national insurance charge based on the period-end share
price.
Professional fees relate predominantly to fees and expenses in relation to the
acquisition of the remaining 80% of Glanty Limited.
Agent recruitment charges relate to share-based charges arising on the issue
of shares to agents committing to long-term service agreements, in line with
the Group's strategy to grow the agent shareholder base.
The government grant costs in the prior period reflect the repayment of
amounts received under the Coronavirus Job Retention Scheme.
Staff related costs relate to costs associated with termination of employment
of employees and costs associated with employee share-based plans.
Prepayment for employee services relates to the amortisation of a payment to
Glanty on acquisition deemed to be in respect of ongoing employee services,
repayable to the Company should employment end, save for certain
circumstances, before the third anniversary of the acquisition of Glanty,
which is being amortised over the three-year period from acquisition.
9. Earnings per share
Unaudited Unaudited
6 months to 31 July 6 months to
2022 31 July
£'000 2021
£'000
Numerators: Earnings attributable to equity
Profit for the period from continuing operations 366 485
attributable to owners of the company
________ ________
Total basic earnings and diluted earnings 366 485
No. No.
Denominators: Weighted average number of
equity shares
Basic 74,769,071 73,143,265
Diluted 82,836,970 80,377,685
Earnings per share Pence Pence
Basic 0.49 0.66
Diluted 0.44 0.60
10. Goodwill
Group
£'000
At 1 February 2022 1,518
-
________
At 31 July 2022 1,518
________
Impairment testing for cash generating units containing goodwill
The Group tests the carrying value of assets at the cash-generating unit
Glanty for impairment annually, or more frequently if there are indicators
that assets might be impaired. The review is undertaken by assessing whether
the carrying value of assets is supported by their value-in-use, which is
calculated as the net present value of future cash flows derived from those
assets, using cash flow projections. If an impairment charge is required, this
is allocated first to reduce the carrying amount of any goodwill allocated to
the cash-generating unit (£1.5m) and then to the other assets of the cash
generating unit, but subject to not reducing any asset below its recoverable
amount.
As Glanty was loss making for H1 22/23 management performed an impairment
review in respect and concluded that no impairment charge was required.
Management noted there were no material changes to the sensitivities and
assumptions disclosed as per the 31 January 2022 financial statements.
11. Intangible assets
Group Development Technology related intangibles Customer related intangibles Total
Costs
£'000 £'000 £'000 £'000
Cost:
At 1 February 2022 16,370 2,028 444 18,842
Additions, internally developed 1,824 408 - 2,232
_______ _______ _______ _______
At 31 July 2022 18,194 2,436 444 21,074
Amortisation:
At 1 February 2022 11,120 165 37 11,322
Charge for the period 1,266 182 28 1,476
_______ _______ _______ _______
At 31 July 2022 12,386 347 65 12,798
________ ________ ________ ________
Net book value: 5,808 2,089 379 8,276
At 31 July 2022
Amortisation is included within administrative expenses in the income
statement.
The development costs relate to those costs incurred in relation to the
development of the Group's online property portal, OnTheMarket.com. The
development costs capitalised above are amortised over a period of 4 years
which represents the period over which the Directors expect the Group to
consume the assets' future economic benefits. The development costs are
amortised from the point at which the asset is ready for use within the
business.
The technology and customer related intangible assets acquired through
business combination relate to the development of software by Glanty for
teclet lettings and teclet CRM products and represent the fair value of those
assets acquired as part of the Group's acquisition of Glanty. The fair value
costs at acquisition are amortised over a period of 8 years from the
acquisition date, which represents the period over which the Directors expect
the Group to consume the assets' future economic benefits. Development costs
incurred in relation to the technology related intangibles after acquisition
are amortised over 4 years from the point at which the asset is ready for use
within the business.
No material amount was recognised as an expense in the period in relation to
research and development expenditure.
12. Share premium cancellation
Following approval from shareholders and the courts, on 23 July 2022 the
cancellation of the Company's share premium account became effective.
The cancellation has the effect of creating distributable reserves and,
subject to the financial performance of the Company and the CA 2006, provides
the Company with greater flexibility to make distributions of profits by way
of dividend or through the purchase of its own shares, as permitted by the CA
2006. No distributions have currently been made or proposed.
13. Related party relationships and transactions
There were no related party transactions during the period ended 31 July 2022.
14. Post balance sheet events
There were no significant post balance sheet events.
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