REG - Property FranchiseGp - Interim Results
12/09/2023 07:00
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RNS Number : 0854M Property Franchise Group PLC (The) 12 September 2023
12 September 2023
THE PROPERTY FRANCHISE GROUP PLC
(the "Company" or the "Group")
Interim Results for the six months ended 30 June 2023
Record H1, outperforming market in lettings and sales
The Property Franchise Group PLC, the UK's largest property franchisor, is
pleased to announce its interim results for the period ended 30 June 2023.
Financial Highlights
· Group revenue increased to £13.2m (H1 2022: £13.1m)
· Management Service Fees ("MSF") increased 3% to £7.7m (H1 2022:
£7.5m)
· Adjusted EBITDA* increased to £5.8m (H1 2022: £5.7m)
· Profit before tax increased 11% to £4.2m (H1 2022: £3.8m)
· Basic earnings per share increased 4% to 10.3p (H1 2022: 9.9p)
· Highly cash generative with net cash of £0.7m at 30 June 2023 (30
June 2022: net debt £2.6m)
· Increased interim dividend by 10% to 4.6p (H1 2022: 4.2p)
* before share-based payments charge
Operational Highlights
· Recurring revenues contributed 65% of total revenue underpinned by
growth in lettings revenue with lettings MSF up to 61% of total MSF (H1 2022:
55%)
· Sales agreed pipeline remained strong at £28.4m (H1 2022: £33.8m)
· Managing 77,000 rental properties (H1 2022: 74,000)
· 7 acquisitions at the franchisee level (H1 2022: 8), added 806
managed properties (H1 2022: 1,001) contributing £0.8m (H1 2022: £1.0m) of
managed income per annum to franchisee turnover
· EweMove sold a further 17 new territories (H1 2022: 19), now
totalling 194 territories (H1 2022: 178)
· Acquisition of Michael Searchers Property Management Ltd in January
2023 for £0.25m adding 147 managed properties to the owned offices portfolio
and £0.2m of annual lettings revenue
Gareth Samples, Chief Executive Officer of The Property Franchise Group, said:
"It's another period of record revenue for us, outperforming the market in
both lettings and sales. Moreover, with continued focus on costs, slightly
down despite the pay increases needed by our employees, we have also set
another record for profit before tax.
This year more than any other under my tenure demonstrates the strength of our
franchise business model and the power that results from a network of
entrepreneurial franchisees seeking to maximise the opportunities in their
local marketplaces.
Overall, our network's lettings revenues have grown 12% to represent 61% of
total network revenue, offsetting the expected impact of the reduction in UK
sales transactions. Pleasingly, this has driven up our recurring revenues to
65% of total revenue.
We remain extremely well-placed in the current environment and have a
substantial growth opportunity to capitalise on. Part of that will come in the
form of improved data usage which we are very excited about as we progress
towards meaningful implementation in 2024.
The second half of each calendar year usually generates higher revenues and
profits. The second half to date appears to be following that trend so far. As
a result, the Board remains confident that trading remains in-line with
expectations for the full year and this confidence is reflected in the interim
dividend for 2023, which I am pleased to report is up 10% to 4.6p."
Investor presentation
The Company is hosting a live private investor presentation on Tuesday 12
September 2023 at 13.00 on the Investor Meet Company platform. All existing
and potential private investors interested in attending are asked to register
using the following link: Register as an Investor - Investor Meet Company
(https://www.investormeetcompany.com/property-franchise-group-plc-the/register-investor)
For further information, please contact:
The Property Franchise Group PLC 01202 405549
Gareth Samples, Chief Executive Officer
David Raggett, Chief Financial Officer
Canaccord Genuity Limited (Nominated Adviser and Joint Broker) 020 7523 8000
Max Hartley
Gordon Hamilton
Singer Capital Markets (Joint Broker) 020 7496 3000
Rick Thompson
James Fischer
Alma PR 020 3405 0209
Justine James
Joe Pederzolli
Kinvara Verdon
About The Property Franchise Group PLC:
The Property Franchise Group PLC (AIM: TPFG) is the largest property
franchisor in the UK and manages the second largest estate agency network and
portfolio of lettings properties in the UK.
The Company was founded in 1986 and has since grown to a diverse portfolio of
nine brands operating throughout the UK, comprising longstanding high-street
focused brands and a hybrid, no sale no fee agency.
The Property Franchise Group's brands are Martin & Co, EweMove, Hunters,
CJ Hole, Ellis & Co, Parkers, Whitegates, Mullucks & Country
Properties.
Headquartered in Bournemouth, UK, the Company was listed on AIM on the London
Stock Exchange in 2013. More information is available at
www.propertyfranchise.co.uk
Chief Executive Officer's Statement
I am delighted to report on a record first half, highlighting the strength of
our model which continues to drive growth despite the current macroeconomic
conditions and a challenging sales market. The robust performance in H1
demonstrates the considerable resilience of our offering, as well as our
ability to consistently deliver, notably outperforming in lettings.
As a franchise network of local business owners, our continued strong
performance is testament to their capabilities. I would like to take this
opportunity to thank our franchisees for their continued hard work,
entrepreneurial flare and teamwork and our staff for supporting them in their
endeavours. Our franchisees have adapted to a different market incredibly
well, driving the success of the Group.
We have further invested in our team in H1, including the hiring of our first
Commercial Director to accelerate progress with our digital marketing
strategy, and in technology. These investments being essential to support our
plans and to provide the platform we need for what I see as an exciting period
of growth.
We continue to make strategic progress irrespective of the conditions in which
we operate. We believe our adaptability amidst changes in our external
environment sets us apart, leaving us well-placed to continue delivering
further growth.
Operational review
Group revenue increased to £13.2m (H1 2022: £13.1m) as we outperformed the
market in lettings and sales. The key element of that, Management Service Fees
("MSF"), increased 3% to £7.7m (H1 2022: £7.5m). The 12% increase in
lettings MSF more than offset the expected weakening in sales MSF.
Key market data reported by the ONS in June 2023 showed its UK annual private
rental index had increased 5.1% (H1 2022: 3.0%) and HMRC data showed
seasonally adjusted UK Property Transactions for June 2023 YTD were 522,650,
20% lower than the same period in 2022.
Alongside our franchisees, we continue to identify further acquisition
opportunities for portfolios of managed lets. We are aiming to capitalise on
our building pipeline of opportunities and bolster our number of managed
lettings' properties by the end of the year, with seven managed lettings
portfolios acquired in H1, contributing £0.8m to franchisees' managed
lettings income per annum. Our long-term objective remains to continue to
consolidate the lettings market locally through assisted portfolio
acquisitions.
EweMove continued to perform well, selling 17 new territories in H1
respectively and generating a record 13% increase in revenue. We are very
pleased with this performance, particularly in light of the current market. We
believe there remains significant future growth opportunities and upside in
the hybrid offering.
With the uncertain interest rate environment, the financial services sector
remains challenging for all. Against this background, Mortgage Genie's
performance was in line with expectations, and the division delivered £0.9m
of revenue in H1 2023 (H1 2022: £0.9m). We continue to see progress in the
partnering of our franchisees with representatives of the PRIMIS network and
the number of franchisees running their own financial services businesses.
Our acquired businesses have successfully integrated into the Group and
continue to perform well, delivering strong returns on capital invested.
Equipped with a proven track record, strong balance sheet and capital, we
continue to evaluate acquisition opportunities.
Our desire to operate best-in-class digital marketing, given the significant
opportunities we see over the next five years, has seen us investing in the
past year into understanding what our technology infrastructure needs to look
like to fundamentally support this organic growth initiative. We have
selectively invested into websites, CRMs, internal dashboards, management
software and referral software. We see digital marketing as one of our biggest
growth initiatives for the future and hold high hopes for the opportunities it
will deliver in 2024 and beyond.
Current Trading and Outlook
We expect the current market conditions to continue through H2, with a strong
lettings market and subdued sales market. That said our resilient business
model is well adept to continue to deliver despite the current external
trading environment.
The lettings market has shown no signs of cooling, with the lack of supply
continuing to increase demand and drive up rents. We have seen double digit
growth in H1, a trend we expect to see for the foreseeable future.
The UK sales market is proving to be more resilient than many commentators had
been predicting. We have seen an improvement in sales' completion times post
period end, with HMRC data for June and July showing an encouragingly positive
trend, something we have seen continue through into August.
With substantial growth opportunities ahead, we are well positioned to
capitalise upon them. We are particularly excited by our enhanced digital
marketing capabilities and improved data usage to support our growth and we
expect to start to see the results of this in the next calendar year.
The second half has traditionally generated higher revenue and profits, and
the second half to date appears to be following the same trend. The Board is
confident that trading remains in line with expectations for the full year and
this confidence is reflected in the interim dividend for 2023, which I am
pleased to report is up 10% to 4.6p.
Gareth Samples
Chief Executive Officer
11 September 2023
Financial Review for 2023 Interim Results
Overall Performance
Growth was suppressed, as it was for H1 2022, by falling sales transactions
with 2023 commencing against a more uncertain and challenging economic
backdrop. Despite these factors, the Group achieved another record for revenue
by outperforming the market in both lettings and sales.
Group revenue increased by 1% to £13.2m (H1 2022: £13.1m) largely because of
the Group's strength in lettings and the experienced sales agents in the
network driving increased market share.
With continued focus on costs, slightly down over H1 2022, despite pay
increases at the start of the year and the ongoing inflationary pressures,
both headline and underlying profit before tax increased to record levels.
Profit before tax increased 11% to £4.2m (H1 2022: £3.8m) and adjusted
profit before tax which excludes the share-based payments charges and
amortisation arising on consolidation increased 3.5% to £5.3m (H1 2022:
£5.2m).
Revenue from Property Franchising
There was record revenue from the property franchising division at £12.3m (H1
2022: £12.2m) with the growth in rents helping to more than offset the
reduction in sales transactions. The Group's lettings revenues increased by
12% whilst the Group's sales revenues reduced by 17%.
Franchise sales continued to be strong in EweMove with 17 new territories sold
in the half year (H1 2022: 19) and there was a significant increase in resales
elsewhere in the Group, with 13 in the high street led franchises (H1 2022:
3). This resulted in revenue from franchise sales increasing by 58% to £0.2m.
There were record Management Service Fees from our franchised network which
increased by 3% to £7.7m (H1 2022: £7.5m). The increase of £0.2m resulted
from an increase in Lettings MSF of 12% to £4.8m and a reduction in Sales MSF
of 11% to £2.9m. Lettings MSF contributed 61% of all MSF in the period (H1
2022: 55%). This increased contribution from lettings helped drive recurring
revenues up to 65% of total Group revenue.
Our hybrid brand EweMove, which charges a monthly licence fee per territory
occupied and a fee per completed transaction, generated a record 13% increase
in revenue to £2.4m (H1 2022: £2.1m). There were 194 occupied territories at
the end of the period (H1 2022: 178) of which 179 were trading (H1 2022: 166)
with the remainder yet to complete pre-trading requirements.
Our nine owned offices in Hunters did not fair quite so well as the franchised
network in the period with a poorer start to the year driven by a reduced
sales agreed pipeline. Hunters contributed revenue of £2.2m, down 12% on H1
2022. There has been a revised approach to sales this year which has delivered
revenue improvements in recent months and an increased sales agreed pipeline.
These actions together with our continued desire to buy lettings businesses,
with Michael Searchers Property Management Limited acquired in January 2023,
are expected to deliver an improved full year result.
There were eight acquisitions of managed properties' portfolios, including the
one for our owned offices, delivering 953 units (H1 2022: 1,001) and
contributing annualised revenue of £1.0m (H1 2022: £1.0m) split £0.2m for
owned offices and £0.8m for franchisees. The latter generating £0.1m of MSF
for the Group.
Revenue from Financial Services
Revenue from our financial services division was £0.9m (H1 2022: £0.9m).
This division remains at an early growth stage and is yet to build up
sufficient business to capitalise on the product transfers and remortgage
activity that the market has seen of recent. We continue to invest time and
effort in growing our share of new purchase mortgages which will in turn
generate reoccurring revenues from remortgage and product transfers in due
course.
Costs
The Group's cost of sales decreased 2% to £2.7m (H1 2022: £2.8m). The lower
introductory commissions and advisor costs in our financial services division
being partially offset by increased costs in our property division to meet the
increased number of trading territories in EweMove and the move to a new
operating system with the capability to accommodate that growth.
Administrative expenses decreased by 1% to £5.6m (H1 2022: £5.7m) with the
inflationary pressures being met with savings in resource usage. These
expenses have been contained at or below £5.7m for the first half of the last
three years due to synergies achieved post-acquisition of Hunters in March
2021 and savings this year.
The assumptions used in determining the share-based payment charge at 31
December 2022 were carried forward into this half year resulting in £0.4m
being charged to the profit and loss account (H1 2022: £0.6m).
EBITDA
The Group's EBITDA increased 5% to £5.3m (H1 2022: £5.1m). Adjusting for the
share-based payment charges, adjusted EBITDA increased 1% to £5.8m (H1 2022:
£5.7m).
Operating profit
Operating profit increased 10% to £4.4m (H1 2022: £4.0m) and operating
margin was 33% (H1 2022: 31%). Adding back the share-based payments charges
and the amortisation arising on consolidation, adjusted operating profit
increased 3% to £5.5m (H1 2022: £5.3m). Adjusted operating margin was 42%
(H1 2022: 41%) indicating the margin being derived from the underlying
activities.
Profit before income tax
Profit before taxation increased 11% to £4.2m (H1 2022: £3.8m). Adding back
the share-based payments charges, and the amortisation arising on
consolidation, adjusted profit before tax increased 3% to £5.3m (H1 2022:
£5.2m).
Taxation
The effective rate of corporation tax for the period was 21.1% (H1 2022:
16.0%). This primarily reflects the increase in the corporation tax rate from
19% to 25% which generates a corporation tax rate for the first half year of
22%.
Profit after taxation
Profit after taxation for the period increased by 4% to £3.3m (H1 2022:
£3.2m).
Earnings per share
Basic earnings per share increased 4% to 10.3p (H1 2022: 9.9p) based on a
weighted average number of shares in issue in the period of 32,041,966 (H1
2022: 32,041,966). This increase was also achieved by the diluted basic
earnings per share.
Adjusted basic earnings per share decreased 1% to 13.9p (H1 2022: 14.1p) based
on a weighted average number of shares in issue in the period of 32,041,966
(H1 2022: 32,041,966). This increase was also achieved by the adjusted diluted
basic earnings per share.
Dividends
The Group has again reported record headline profits and has generated
material free cash to return to a net cash position.
As a result, the Board is pleased to announce an 10% increase in the interim
dividend to 4.6p (H1 2022: 4.2p). It will be paid on 6 October 2023 to all
shareholders on the register on 22 September 2023. Our shares will be marked
ex-dividend on 21 September 2023. The total amount payable is £1.5m.
Summary of Key Financials
H1 2023 H1 2022 Growth
Revenue £13.2m £13.1m 1%
MSF £7.7m £7.5m 3%
Cost of sales £2.7m £2.8m -2%
Admin expenses £5.6m £5.7m -1%
EBITDA £5.3m £5.1m 5%
Adjusted EBITDA £5.8m £5.7m 1%
Operating profit £4.4m £4.0m 11%
Adjusted operating profit £5.5m £5.4m 3%
Profit before tax £4.2m £3.8m 9%
Adjusted profit before tax £5.3m £5.2m 3%
Earnings per share (basic) 10.3p 9.9p 4%
Adjusted earnings per share (basic) 13.9p 14.1p -1%
Adjusted earnings per share (diluted) 13.9p 14.1p -1%
Dividend 4.6p 4.2p 10%
Net cash generated from operations £2.5m £3.3m -26%
EweMove
Revenues continue to grow and are up 13% on H1 2022. We have made the
decision to invest in additional support for its new entrants and have
replaced its operating software to support future growth.
H1 2023 H1 2022 Growth
Revenue £2.4m £2.1m 13%
Costs £1.7m £1.4m 18%
Profit before tax £0.7m £0.7m -
Profit margin 29% 32%
Cash flow
At an operational level, the Group remains highly cash generative although, as
for the same period last year, there are increased debtors of which £0.7m
relates to sums due from partners in H2. The Group also had lower trade
creditors and accruals of £1.0m which reflects the timing of payments,
savings and performance in 2023.
As a result, cash generated from operations decreased by 17% to £3.6m (H1
2022: £4.4m). That represents 68% (H1 2022: 86%) conversion of EBITDA into
cash generated from operations. For the reasons stated above, we expect this
conversation rate to improve in the second half of this year.
On 31 January 2023 the Group acquired the entire issued share capital of
Michael Searchers Property Management Ltd for a net cash consideration of
£0.2m (H1 2022: nil).
On 9 June 2023, the Group paid a final dividend of 8.8p for 2022 (H1 2022:
7.8p for 2021) which amounted to £2.8m (H1 2022: £2.5m).
During the period the Group reduced its usage of its RCF with Barclays Bank
Plc from £5.0m to £2.5m. In the prior first half year the Group still had a
term loan as well as the RCF resulting from the acquisition of Hunters and
made repayments of £0.9m. This loan was repaid in the second half of 2022. A
total of £13.0m of bank loans (£10.0m borrowed by TPFG and £3.0m of
existing borrowings by Hunters) have now been repaid since the Hunters
acquisition in March 2021.
During the period bank loan interest of £0.2m (H1 2022: £0.2m) was paid.
Overall, the cash balances of the Group decreased by £3.5m to £3.2m (H1
2022: £7.6m).
Liquidity
The Group had a net cash balance of £0.7m at the end of the period (H1 2022:
net debt £2.6m).
Financial position
The Group has a consistent history of strong cash generating capabilities, has
returned to a net cash position and continues to operate comfortably within
its bank covenants. It generates sufficient net cash from operations to fund
its acquisition strategy and to reward shareholders with increased dividends.
The Group has also improved its balance sheet strength since 30 June 2022 with
equity attributable to the owners increasing 10% to £38.2m (H1 2022:
£34.7m).
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.
David Raggett
Chief Financial Officer
11 September 2023
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Unaudited Unaudited Audited
6 Months Ended 6 Months Ended 12 Months Ended
30.06.23 30.06.22 31.
12.
22
£'000 £'000 £'000
Revenue 13,182 13,089 27,158
Cost of sales (2,726) (2,770) (5,575)
GROSS PROFIT 10,456 10,319 21,583
Administrative expenses (5,646) (5,679) (11,876)
Share-based payments charge (416) (644) (411)
OPERATING PROFIT 4,394 3,996 9,296
Finance income 3 15 39
Finance costs (200) (220) (470)
Other gains and losses - - (32)
PROFIT BEFORE INCOME TAX EXPENSE 4,197 3,791 8,833
Income tax expense (886) (608) (1,588)
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 3,311 3,183 7,245
PROFIT AND TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD ATTRIBUTABLE TO:
Owners of the parent 3,314 3,169 7,229
Non-controlling minority interest (3) 14 16
3,311 3,183 7,245
Earnings per share 10.3p 9.9p 22.6p
attributable to owners of the parent
Diluted earnings per share attributable to owners of the parent 10.3p 9.9p 22.5p
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Unaudited Unaudited Audited
As at 30.06.23 As at 30.06.22 As at 31.12.22
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Intangible assets 44,462 46,100 44,958
Property, plant and equipment 229 224 162
Investments 137 169 137
Right of use assets 1,456 1,591 1,613
Prepaid assisted acquisitions support 266 391 297
Other Receivables 220 - 240
46,770 48,475 47,407
CURRENT ASSETS
Trade and other receivables 4,521 3,892 3,718
Cash and cash equivalents 3,224 7,578 6,684
7,745 11,470 10,402
TOTAL ASSETS 54,515 59,945 57,809
ISSUED CAPITAL AND RESERVES
ATTRIBUTABLE TO OWNERS OF PARENT
Share capital 320 320 320
Share premium 4,129 4,129 4,129
Merger reserve 14,345 14,345 14,345
Own share reserve (348) (348) (348)
Retained earnings 17,906 14,679 17,399
Other reserves 1,851 1,594 1,316
38,203 34,719 37,161
NON-CONTROLLING INTEREST 19 20 22
TOTAL EQUITY 38,222 34,739 37,183
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings - 8,281 5,000
Lease liabilities 1,626 2,002 1,856
Provisions 181 212 212
Deferred tax 4,744 5,153 5,168
6,551 15,648 12,236
CURRENT LIABILITIES
Borrowings 2,500 1,875 -
Trade and other payables 5,432 5,979 6,724
Lease liabilities 495 502 506
Tax payable 1,315 1,202 1,160
9,742 9,558 8,390
TOTAL LIABILITIES 16,293 25,206 20,626
TOTAL EQUITY AND LIABILITIES 54,515 59,945 57,809
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2023
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 2022 (audited) 320 13,999 4,129 (348) 14,345 905 33,350 6 33,356
Profit and total comprehensive income - 3,169 - - - - 3,169 14 3,183
Share-based payments charge - - - - - 644 644 - 644
Deferred tax on share options - - - - - 45 45 - 45
Dividends - (2,489) - - - - (2,489) - (2,489)
Total transactions with owners - (2,489) - - - 689 (1,800) - (1,800)
Balance at 30 June 2022 (unaudited) 320 14,679 4,129 (348) 14,345 1,594 34,719 20 34,739
Profit and total comprehensive income - 4,060 - - - - 4,060 2 4,062
Share-based payments charge - - - - - (233) (233) - (233)
Deferred tax on share options - - - - - (45) (45) - (45)
Dividends - (1,340) - - - - (1,340) - (1,340)
Total transactions with owners - (1,340) - - - (278) (1,618) - (1,618)
Balance at 31 December 2022 (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 options - - - - - 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
THE PROPERTY FRANCHISE GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Unaudited Unaudited Audited
6 Months Ended 6 Months Ended 12 Months Ended
30.06.23 30.06.22 31
.1
2.
22
£'000 £'000 £'000
Cash flows from operating activities
Profit before income tax 4,197 3,791 8,833
Depreciation and amortisation charges 1,036 1,095 2,102
Revaluation of investments in shares - - 32
Share-based payments charge 416 644 411
Profit on disposal of FDGs and rebrands (95) - (195)
Finance costs 200 220 471
Finance income (3) (15) (39)
Operating cash flow before changes in working capital 5,751 5,735 11,615
Increase in trade and other receivables (783) (1,071) (837)
Increase / (Decrease) in trade and other payables (1,348) (281) 517
Cash generated from operations 3,620 4,383 11,295
Interest paid (158) (162) (359)
Tax paid (1,012) (908) (1,962)
Net cash generated from operations 2,450 3,313 8,974
Cash flows from investing activities
Purchase of subsidiaries net of cash acquired (202) - -
Purchase of intangible assets - (356) (387)
Disposal of intangible assets - FDGs and rebrands 54 - 143
Disposal of intangible assets - Customer lists - - 150
Purchase of tangible assets (106) (58) (38)
Payment of assisted acquisitions support (67) (87) (102)
Interest received 3 15 39
Net cash used in investing activities (318) (486) (195)
Cash flows from financing activities
Equity dividends paid (note 7) (2,807) (2,489) (3,829)
Bank loan repaid (2,500) (938) (6,094)
Principal paid on lease liabilities (236) (177) (473)
Interest paid on lease liabilities (49) (58) (112)
Net cash used in financing activities (5,592) (3,662) (10,508)
Decrease in cash and cash equivalents (3,460) (835) (1,729)
Cash and cash equivalents at the beginning of the period 6,684 8,413 8,413
Cash and cash equivalents at end of the period 3,224 7,578 6,684
THE PROPERTY FRANCHISE GROUP PLC
NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
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, UK.
2. BASIS OF PREPARATION
The consolidated interim financial information for the six months ended 30
June 2023 was approved by the Board and authorised for issue on 11 September
2023. The results for 30 June 2023 and 30 June 2022 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 2022 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
2023, and uses the same accounting policies and methods of computation applied
for the year ended 31 December 2022.
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 2023. 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.
When necessary amounts reported by subsidiaries have been adjusted to conform
with the Group's accounting policies.
3. SEGMENTAL REPORTING
The directors consider there to be two operating segments being Property
Franchising and Financial Services.
For the six months ended 30 June 2023:
Property Financial
Franchising Services Total
Continuing £'000 £'000 £'000
Revenue 12,286 896 13,182
Segment profit before tax 3,820 377 4,197
For the six months ended 30 June 2022:
Property Financial
Franchising Services Total
Continuing £'000 £'000 £'000
Revenue 12,211 878 13,089
Segment profit before tax 3,575 216 3,791
For the year ended 31 December 2022:
Property Financial Services
Franchising Total
Continuing £'000 £'000 £'000
Revenue 25,429 1,729 27,158
Segment profit before tax 8,379 454 8,833
There was no inter-segment revenue in any period.
4. REVENUE
Unaudited Unaudited Audited
6 Months Ended 6 Months Ended 12 Months Ended
30.06.23 30.06.22 31.12.22
£ £ £
Management service fee 7,696 7,496 15,882
Owned offices revenue 2,239 2,548 5,157
Franchise sales 232 147 318
Franchisee support and similar services 2,119 2,020 4,072
12,286 12,211 25,429
Financial Services segment: 896 878
Financial Services commissions
1,729
13,182 13,089 27,158
All revenue is earned in the UK and no customer represents greater than 10 per
cent of total revenue in the periods reported.
5. TAXATION
The underlying tax charge is based on the expected effective tax rate for the
full year to December 2023. The majority of the tax arises from applying this
effective tax rate to the profit on ordinary activities.
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
30.06.23 30.06.22 31.12.22
£'000 £'000 £'000
Profit for the period attributable to owners of parent 3,314 3,169 7,229
Amortisation on acquired intangibles 721 721 1,443
Share-based payments charge 416 644 411
Loss on revaluation of listed investments - - 32
Adjusted profit for the period 4,451 4,534 9,115
6. EARNINGS PER SHARE (CONTINUED)
Unaudited Audited
Unaudited
6 Months 6 Months Ended 12 Months Ended
Ended
30.06.23 30.06.22 31.12.22
32,041,966 32,041,966 32,041,966
Weighted average number of shares
Dilutive effect of share options on ordinary shares 99,608 99,667 99,626
32,141,574 32,141,633
32,141,592
Unaudited Audited
Unaudited
6 Months 6 Months Ended 12 Months Ended
Ended
30.06.23 30.06.22 31.12.22
Basic earnings per share 10.3p 9.9p 22.6p
Diluted earnings per share 10.3p 9.9p 22.5p
13.9p 14.1p 28.4p
Adjusted basic earnings per share
Adjusted diluted earnings per share 13.9p 14.1p 28.4p
7. DIVIDENDS
Unaudited Unaudited Audited
As at As at As at
30.06.23 30.06.22 31.12.22
£'000 £'000 £'000
Final dividend paid 2,807 2,489 2,489
Dividend per share paid 8.8p 7.8p 7.8p
Interim dividend paid - - 1,340
Dividend per share paid - - 4.2p
Total Dividends paid 2,807 2,489 3,829
An interim dividend for 2023 of 4.6p per share has been declared and will be
paid on 6 October 2023 to all shareholders on the register on 22 September
2023. Our shares will be marked ex-dividend on 21 September 2023. The total
amount payable is £1.48m.
8. ACQUISITIONS
Acquisition of Michael Searchers Property Management Limited
On 31 January 2023 Hunters (Midlands) Limited acquired the entire issued share
capital of Michael Searchers Property Management Limited for consideration of
£257k. This consisted of £225k paid on completion, £7k paid for excess
working capital and £25k deferred consideration to be paid in August 2023.
The business was immediately hived up into Hunters (Midlands) Limited, a
subsidiary of The Property Franchise Group plc. Net assets of £33k were
acquired and £224k recognised in intangible assets as a customer list.
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