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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Belvoir Group Plc | LSE:BLV | London | Ordinary Share | GB00B4QY1P51 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 279.00 | 0.00 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Lessors Of Real Property,nec | 33.72M | 7.41M | 0.1986 | 14.05 | 104.08M |
TIDMBLV
RNS Number : 7933P
Belvoir Lettings PLC
05 September 2017
For Immediate Release 5 September 2017
BELVOIR!
BELVOIR LETTINGS PLC
(the "Company" or "Belvoir")
Interim Results for the six months ended 30 June 2017
Belvoir Lettings PLC (AIM: BLV), the UK's largest property franchise, is pleased to announce interim results for the six months ended 30 June 2017.
Financial Highlights
-- Group revenue up 15% to GBP4,921,000 (H1 2016: GBP4,293,000) -- 47% increase in Management Service Fees (MSF) to GBP3,796,000 (H1 2016: GBP2,580,000) -- 62% increase in profit before tax to GBP1,731,000 (H1 2016: GBP1,071,000)
-- H1 results reflect full six months period beneficial impact of Northwood acquired on 7 June 2016 and the franchising out of six corporate offices since 30 June 2016
-- Basic earnings per share of 4.1p (2016: 2.6p) and adjusted earnings per share of 5.0p (H1 2016: 3.5p)
-- Interim dividend of 3.4p, consistent with prior year with dividend cover now at 1.2 (H1 2016: 0.7)
Operational Highlights
-- Seven new franchise owners joining the Group into two new and five existing territories
-- Twelve franchisee-led acquisitions adding GBP1,732,000 of network revenue and GBP188,000 recurring MSF income
-- Lettings to sales ratio of 81:19 (H1 2016: 73:27) reflects lettings bias of Northwood -- Number of offices nationwide of 300 (H1 2016: 306) across four networks
-- Acquisition of Brook Financial Services Ltd (Brook) on 12 July 2017 to provide mortgage, insurance and other financial services to the Group
Dorian Gonsalves, Chief Executive Officer of Belvoir Lettings, commenting on the results, said:
"The Group has been focused on meeting our franchisees entrepreneurial growth ambitions and putting them in the very best possible position to maximise their market share within their territory. Our franchisees have embraced the opportunity to develop their business under our Assisted Acquisitions programme, many of them doubling the size of their business overnight, and from offering additional services such as property sales and financial services. The acquisition of Brook in July will provide further opportunity for growth at both the franchisee and franchisor level.
"In H1 the Group achieved organic growth from MSF, our key revenue stream, of 4% which is higher than the reported rental index within the sector, and continued growth from property sales, in a market that has seen some mixed results from other companies in the sector.
"Our ability to outperform the market has helped to deliver a strong set of first half results, and with a promising start to the second half, Belvoir is on track to meet management expectations for the year."
For further details:
Belvoir Lettings PLC 01476 584900 Mike Goddard, Chairman investorrelations@belvoirlettings.com Dorian Gonsalves, Chief Executive Officer Louise George, Chief Financial Officer Cantor Fitzgerald Europe Rick Thompson, Phil Davies, Will Goode Corporate Finance 0207 894 7000 Mark Westcott, Caspar Shand-Kydd Sales Buchanan Charles Ryland, Vicky Hayns, Madeleine Seacombe 0207 466 5000
The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
About Belvoir Lettings PLC
Founded in 1995 and listed on AIM in 2012 (BLV.L), Belvoir operates a nationwide property franchise group with 300 offices across four brands offering a range of specialist services in property rental, property management, residential lettings, buy to let and property sales. With its Central Office in Grantham, Lincolnshire, the Group manages over 57,000 properties and reported revenue of GBP9.9m in 2016 making Belvoir the largest property franchise group in the UK.
Belvoir's core revenue is derived from Management Service Fees (MSF); a reliable recurring revenue model through which the Group offers franchisees significant support and advice.
In 2015 Belvoir launched its multi-brand franchising strategy and now owns Newton Fallowell Limited in the East Midlands, Goodchilds Estate Agents and Lettings Limited in the West Midlands and Northwood GB Limited, a nationwide network. In total, the Group operates from 300 territories within the UK. In July 2017, the Group acquired Brook Financial Services Ltd, a mortgage broker and financial service provider.
The Company remains committed to diversifying its brand portfolio, utilising the Group's strong franchising expertise and infrastructure, in order to capitalise on a consolidating market.
Chief Executive's Report
It gives me great pleasure to report on the Group's interim results for the six months ended 30 June 2017.
Overview
The first six months of 2017 has seen further strategic progress driving profitable growth across the Belvoir Group. The emphasis has been on supporting our franchisees to strengthen their businesses in response to anticipated changes within the sector including the Government's intention to ban tenant fees. Our franchisees have responded positively with a further 17 Belvoir franchisees taking up property sales as part of their service offering, three Newton Fallowell sales-only franchisees embarking on a lettings service and twelve franchisees across the Group completing on local portfolio acquisitions under our Assisted Acquisitions programme.
Income from management service fees (MSF), our core revenue stream, increased by 47%. Whilst 40% reflects the full six month inclusion of Northwood acquired on 7 June 2016, the organic growth achieved at 4% exceeds the Belvoir Q2 rental index of 2.75% and demonstrates the Group's ability to outperform the market. In addition MSF was boosted by a further 3% due to the continued roll out of property sales by the lettings dominant Belvoir and Northwood networks and from the increased network revenue arising on the franchise-led portfolio acquisitions.
Market
Both the sales and the lettings markets being subject to challenging conditions. A shortage of housing stock available for sale has reduced activity in the sales market and the changes to the tax regime and stamp duty for buy to let landlords and the impending ban on tenant fees has caused some uncertainty in the lettings market. Notwithstanding the market conditions, Belvoir continues to perform well on both fronts.
Lettings and portfolio acquisitions
The beneficial impact of the Northwood acquisition is evident in the increased bias towards lettings with the lettings to sales ratio now at 81:19 (H1 2016: 73:27). The Board still sees lettings as a reliable and growing recurring revenue stream. In the first half of 2017, we proactively engaged with franchisees through a series of roadshows to outline how the Belvoir Central Office team could support franchisees to take advantage of consolidation within the sector by acquiring local lettings portfolios. In the year to date, twelve of our franchisees have benefitted from the Assisted Acquisitions programme increasing network revenue by GBP1,732,000 at a total deal cost of GBP2,117,000, of which GBP322,000 was funded by a Central Office loan. Together, these acquisitions will increase MSF by GBP188,000 in a full year and GBP83,000 in the current financial year.
As a result of organic growth and growth from portfolio acquisitions, the number of properties now managed by the Group increased by 6.7% to 57,637 (H1 2016: 54,000).
Property sales and financial services
In a market that saw mixed results for many established estate agents, Belvoir enjoys a clear upward trend in MSF from property sales with most of our Belvoir, Northwood and Goodchilds franchisees seeing sales as an opportunity to offer additional services, and our established estate agent Newton Fallowell continuing to dominate the market in which it operates. In order to maximise revenue from property sales, Belvoir acquired Brook Financial Services Ltd, a provider of mortgage and related financial services, in July 2017. Brook is able to deliver a more focused approach enabling materially greater penetration of Belvoir's client base which is expected to increase the financial services fees generated on property sales across all Group networks. The Group recognises the need to adapt to changes in the sector and is currently working towards an online self-service estate agency platform to be offered alongside our traditional estate agency service.
Strategic growth
Belvoir's strategy has always been to put its franchisees at the heart of its growth plans with the focus on supporting each and every franchisee to achieve their potential, supported by a professional and effective Central Office team. Since 2014 over 30 franchise owners have been supported by Belvoir in making a local portfolio acquisition, in many cases, as much as doubling the size of their business overnight. We have further such deals currently with lawyers and other opportunities under review which are expected to deliver similar growth in the second half of the year. Meanwhile the Group has demonstrated its capability to operate on a multi-brand basis leveraging its deep understanding of franchising and considerable experience of the property sector. The Board continues to evaluate opportunities for further significant consolidation within the sector at a larger scale.
Staff
I would like to take this opportunity to thank Mike Goddard for his remarkable stewardship of the Belvoir Group since he founded it in 1995, and in particular for his strategic vision over the past three years which has resulted in the Group more than doubling. In his ongoing role as Chairman, Mike will continue to provide that strategic input that has ensured Belvoir has been such a success. I am also grateful to Mike and my fellow Board members for their confidence in appointing me to lead the Group as its Chief Executive. As a team we have demonstrated how to build a Group based on the core principles of professionalism, excellent customer service and strong business ethics. In my new role as Chief Executive, I look forward to working with the Board and our team of staff, whose commitment and enthusiasm is much appreciated, to drive the Group forward.
Dividend
It is the current policy of the Board to gradually increase dividend cover and we are therefore recommending an unchanged dividend of 3.4p per share for the half year. This will be reviewed again at the end of the year.
Outlook
Having reported strong results in the first half of 2017, demonstrating clear strategic progress for the Group, I am pleased to further report that with a promising start to the second half of the year, Belvoir is making good progress and current year trading is in line with market expectations.
Belvoir will continue to provide a high quality support system to its franchisees including the provision of the necessary technology tools to enable them to adapt to a changing environment. Belvoir is well placed to take advantage of further consolidation in the property market for its franchise owners, and for the Group itself to continue to lead the overall property franchise market, by capitalising on its expertise as a franchisor.
Dorian Gonsalves
Chief Executive Officer
Financial Review
Revenue
Group revenue for the six months ended 30 June 2017 increased by 15% to GBP4,921,000 (H1 2016: GBP4,293,000) reflecting an increment of GBP1,134,000 from a full six months of trading of Northwood, acquired 7 June 2016, and a reduction of GBP541,000 following the franchising out of six corporate offices since June 2016.
MSF increased by 47% to GBP3,796,000 (H1 2016: GBP2,580,000) reflecting growth of 40% from the full period inclusion of Northwood, 4% from organic growth, 1.6% from growth in estate agency and 1.4% from franchisee-led acquisitions under the Belvoir Assisted Acquisitions programme.
Corporate offices contributed reduced revenue of GBP687,000 (H1 2016: GBP1,228,000) in line with the Group's strategy of building a pure franchise model. In the second half of 2016 four corporate offices were sold to franchisees and in the first quarter of 2017 the Devizes office was sold to a new Belvoir franchise owner and the Burton office as a second territory to an existing Belvoir franchise owner. In April, the Central Office team stepped in to caretake the Yardley and Solihull offices before handing over to a new franchise owner from September. Of the remaining four corporate offices, the two in Grantham will continue as corporate offices for the foreseeable future, whilst a franchise solution is being sought for the offices in Spalding and Cumbria. The reduction in revenue from corporate offices of GBP541,000 was offset by a reduction in operating costs of GBP570,000. Overall, corporate offices contributed EBITDA of GBP177,000 (H1 2016: GBP148,000).
Initial franchise fees and resales commissions contributed GBP115,000 (H1 2016: GBP163,000). During the period three new franchise owners joined the Belvoir Group and a further four completed their induction training in August giving a total of seven (2016: four) new franchise owners year to date. Of these, five have taken over an existing office and two are opening in new territories under our Enhanced Start programme which supports an incoming franchisee to acquire a local lettings agency to rebrand to one of the Group's networks.
Other income which includes income from financial services was GBP323,000 (H1 2016: GBP322,000). Following the acquisition of Brook in July 2017, the revenue stream from financial services is expected to increase going forward.
Administrative expenditure
Ongoing administrative expenses were unchanged at GBP3,154,000 (H1 2016: GBP3,148,000). The increased cost of operating Northwood of GBP524,000 was mitigated by the reduced cost of operating the corporate offices of GBP570,000.
In February, with the support of the Northwood senior management team, which is operating under an earn out period until May 2018, a restructuring of the Northwood cost base was carried out aimed at consolidating some of the functions at a group level and introducing some efficiencies into the operations. This gave rise to redundancy costs of GBP22,000, which have been reported as exceptional costs, and reduced overheads of GBP250,000 p.a. going forward.
Exceptional costs of GBP193,000 in H1 2016 relate to the acquisition of Northwood.
Deemed interest of GBP68,000 (H1 2016: nil) arose from the deferred consideration on Northwood.
Profit before taxation
Profit before taxation for the period was up 62% to GBP1,731,000 (H1 2016: GBP1,071,000) with adjusted profit before taxation up 52% to GBP2,062,000 (H1 2016: GBP1,354,000) before exceptional costs and amortisation of acquired intangibles.
Taxation
The effective rate of corporation tax for the period was 19.25% (H1 2016: 23.5%).
Profit after taxation
Profit after taxation for the period was up 71% to GBP1,398,000 (H1 2016: GBP818,000) with adjusted profit after taxation up 55% to GBP1,710,000 (H1 2016: GBP1,101,000).
Earnings per share
Basic earnings per share was 4.1p (H1 2016: 2.6p) based on an average number of shares in issue in the period of 34,412,826 (H1 2016: 31,061,678). As adjusted for exceptional costs and the amortisation of acquired intangibles, the adjusted basic earnings per share was up 43% to 5.0p (H1 2016: 3.5p).
Diluted basic earnings per share was 4.0p (H1 2016: 2.6p) and adjusted diluted earnings per share was 4.8p (H1 2016: 3.4p) based on an average number of shares in issue in the period of 35,351,225 (H1 2016: 32,000,077).
Dividends
In line with the Groups' policy to increase dividend cover, the Board is proposing an unchanged interim dividend for 2017 of 3.4p per share, payable to shareholders on 27 October 2017 based upon the register on 15 September 2017. The ex-dividend date will be 14 September 2017. The dividend cover is now at 1.2 (H1 2016: 0.7).
Cash flow
On an operational level, the Group is highly cash generative with net cash inflow from operations at GBP1,908,000 (H1 2016: GBP1,192,000) reflecting the enlarged Group. During the period there was a net inflow from the franchisee loan book of GBP268,000 (H1 2016: GBP99,000).
On 23 January 2017 the Company issued 803,284 new ordinary shares of one pence at a price of 116.67p each to the vendors of Northwood GB Limited in settlement of the initial consideration due under the terms of the acquisition. These shares are subject to a 12 month lock-in.
The other principal cash movements reported in the first half of 2016 reflected the acquisition of Northwood with the initial consideration of GBP8,000,000 being funded by means of additional bank lending of GBP6,000,000 and an equity fund-raise of GBP2,570,000.
Post period acquisition
In July 2017 the Group acquired Brook Financial Services Ltd for a total consideration of GBP2m which was satisfied by a GBP1.5 million cash payment from existing cash resources and the issue of GBP0.5 million new ordinary shares in Belvoir to the sole shareholder, Michelle Brook, which are subject of a three year lock in. Michelle Brook will continue working full-time as Managing Director of Brook.
Liquidity and capital resources
The Group had cash balances of GBP2,128,000 (H1 2016: GBP1,251,000) and a NatWest bank loan of GBP6,797,000 (H1 2016: GBP7,014,000). The loan is repayable GBP175,000 quarterly with a bullet repayment of GBP4.0m in March 2021. The Bank agreed to a repayment holiday for the June and September 2017 quarters to facilitate the acquisition of Brook Financial Services ltd in July 2017. These payments will be caught up in December 2017 and March 2018.
Financial position
The Group continues to operate from a sound financial platform generating sufficient cash from the operations of the enlarged Group to meet the interest and capital payable on the loan facility and dividends to shareholders. At the end of June 2017, the Group was comfortably inside its bank covenants with the debt service cover at 3.8 times. The Group maintains a franchisee loan book, currently at GBP4.8m (H1 2016: GBP4.4m), the capital repayments of which are used to give further financial assistance to franchisees under the Assisted Acquisitions programme to accelerate their growth and therein contribute towards increased Group revenue.
Louise George
Chief Financial Officer
Condensed Group Statement of Comprehensive Income
For the six months ended 30 June 2017
Notes Unaudited Unaudited Audited Six Six Year months months ended ended ended 31 December 30 June 30 2016 2017 June 2016 GBP'000 GBP'000 GBP'000 Continuing operations Revenue 2 4,921 4,293 9,940 ---------- ---------- ------------- Administrative expenses Non exceptional (3,154) (3,148) (6,948) Exceptional (22) (193) (482) ---------- ---------- ------------- (3,176) (3,341) (7,430) Operating profit 1,745 952 2,510 Loss on disposal of corporate outlets - - (160) Finance costs (104) (32) (139) Finance income 158 151 291 Exceptional deemed interest on contingent consideration (68) - (93) Profit before taxation 1,731 1,071 2,409 Taxation 4 (332) (253) (576) ---------- ---------- ------------- Profit and total comprehensive income for the financial period 1,399 818 1,833 Profit for the period attributable to the equity holders of the parent company 1,399 818 1,833 ---------- ---------- ------------- Basic earnings per share from continuing operations 5 4.1p 2.6p 5.7p Adjusted basic earnings per share from continuing operations 5 5.0p 3.5p 7.7p Adjusted diluted earnings per share from continuing operations 5 4.9p 3.4p 7.4p ---------- ---------- -------------
Consolidated Statement of Financial Position
As at 30 June 2017
Unaudited Unaudited Audited At At At 30 30 31 December June June 2016 2017 2016 GBP'000 GBP'000 GBP'000 ---------- ---------- ------------- Assets Non-current assets ========== ========== ============= Intangible assets 24,523 27,904 24,772 Property, plant and equipment 641 793 657 Trade and other receivables 4,800 4,403 4,024 ========== ========== ============= 29,964 33,100 29,453 ========== ========== ============= Current assets ========== ========== ============= Trade and other receivables 1,704 1,911 2,740 Cash and cash equivalents 2,128 1,251 1,591 ========== ========== ============= 3,832 3,162 4,331 ---------- ---------- ------------- Total assets 33,796 36,262 33,784 Liabilities Non current liabilities ========== ========== ============= Interest bearing loans and borrowings 6,097 6,639 6,270 Deferred consideration 4,281 6,121 4,281 Deferred tax 2,024 2,472 2,054 ========== ========== ============= 12,402 15,232 12,605 Current liabilities ========== ========== ============= Trade and other payables 1,713 1,635 1,239 Interest bearing loans and borrowings 700 375 692 Deferred consideration - 1,254 1,068 Tax payable 473 322 849 ========== ========== ============= 2,886 3,586 3,848 ---------- ---------- ------------- Total liabilities 15,288 18,818 16,453 ---------- ---------- ------------- Total net assets 18,508 17,444 17,331 ---------- ---------- ------------- Equity Shareholders' equity ========== ========== ============= Share capital 344 336 336 Share premium 11,511 10,583 10,583 Share based payment reserve 89 60 76 Other components of equity 162 162 162 Merger reserve (5,774) (5,774) (5,774) Retained earnings 12,176 12,077 11,948 ========== ========== ============= Total equity 18,508 17,444 17,331 ========== ========== =============
Consolidated Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2017
Share Share Share Merger Other Retained Total capital premium based reserve components earnings equity payment of equity reserve GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 --------- --------- --------- --------- ------------ ---------- -------- Balance at 1 January 2016 (Audited) 305 7,379 51 (5,774) 162 12,298 14,421 Issue of equity share capital 31 3,204 - - - - 3,235 Share based payments - - 9 - - - 9 Dividends - - - - - (1,039) (1,039) Transactions with owners 31 3,204 9 - - (1,039) 2,205 Profit and total comprehensive income for the six month period - - - - - 818 818 Balance at 30 June 2016 (Unaudited) 336 10,583 60 (5,774) 162 12,077 17,444 Share based payments - - 16 - - - 16 Dividends - - - - - (1,144) (1,144) --------- --------- --------- --------- ------------ ---------- -------- Transactions with owners - - 16 - - (1,144) (1,128) Profit and total comprehensive income for the six month period - - - - - 1,015 1,015 ========= ========= ========= ========= ============ ========== ======== Balance at 31 December 2016 (Audited) 336 10,583 76 (5,774) 162 11,948 17,331 ========= ========= ========= ========= ============ ========== ======== Issue of equity share capital 8 928 - - - - 936 Share based payments - - 13 - - - 13 Dividends - - - - - (1,171) (1,171) --------- --------- --------- --------- ------------ ---------- -------- Transactions with owners 8 928 13 - - (1,171) (222) Profit and total comprehensive income for the six month period - - - - - 1,399 1,399 --------- --------- --------- --------- ------------ ---------- -------- Balance at 30 June
2017(Unaudited) 344 11,511 89 (5,774) 162 12,176 18,508 --------- --------- --------- --------- ------------ ---------- --------
Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
Notes Unaudited Unaudited Audited 30 June 30 June 31 December 2017 2016 2016 GBP'000 GBP'000 GBP'000 ---------- ---------- ------------- Operating activities ========== ========== ============= Cash generated from operating activities 6 1,908 1,192 2,946 Tax paid (250) (305) (597) ========== ========== ============= 1,658 887 2,349 Investing activities ========== ========== ============= Capital expenditure on property, plant and equipment (30) (66) (80) Corporate network acquisitions 7 - (8,000) (8,005) Settlement of deferred consideration (988) (1,901) (2,202) Corporate office acquisitions - (31) - Working capital and cash introduced by companies acquired - 232 243 Disposals of assets 71 7 797 Franchisee loans granted (75) (419) (1,352) Loans repaid by franchisees 343 518 938 Finance income 153 151 291 ========== ========== ============= Net cash (used in) / from investing activities (526) (9,509) (9,370) Financing activities ========== ========== ============= Finance costs (185) (68) (185) Funds advanced - 7,000 7000 Loan repayments in the period (175) (1,000) (1,000) Proceeds from share issue 936 2,570 2,570 Share placing costs - (269) (269) Equity dividends paid (1,171) (1,039) (2,183) ========== ========== ============= Net cash from / (used in) financing activities (595) 7,194 5,933 ---------- ---------- ------------- Net change in cash and cash equivalents 537 (1,428) (1,088) Cash and cash equivalents at the beginning of the financial period 1,591 2,679 2,679 ---------- ---------- ------------- Cash and cash equivalents at the end of the period 2,128 1,251 1,591 ---------- ---------- -------------
Notes to the Interim Financial Statements
1 General information and basis of preparation
The financial information set out in these condensed consolidated interim financial statements for the six months ended 30 June 2017 and the comparative figures are unaudited.
They have been prepared taking into account the requirements of relevant accounting standards and the AIM rules. They do not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act and do not contain all the information required for full annual financial statements.
The statutory audited accounts for the year ended 31 December 2016 have been delivered to the Registrar of Companies in England and Wales. The Auditor's report on these accounts was unqualified and did not contain statements under Section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements are presented in sterling, which is also the functional currency of the parent company.
Belvoir Lettings PLC is the group's ultimate parent company. The company is a Public Limited Company incorporated and domiciled in the United Kingdom.
The Group's registered office and principal place of business is The Old Courthouse, 60a London Road, Grantham, Lincolnshire, NG31 6HR. Its shares are listed on the AIM market of the London Stock Exchange.
The condensed interim financial statements for Belvoir Lettings PLC have been approved for issue by the Board of Directors on 4 September 2017.
Significant accounting policies
The condensed consolidated interim financial statements have been prepared under the historical cost convention. Being listed on the AIM of the London Stock Exchange, the company is required to present its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS's") as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The accounting policies have been applied consistently throughout the group for the purposes of preparation of these condensed consolidated interim financial statements.
Revenue recognition
Revenue represents income from management service fees (MSF), fees from the sale of franchise licences (initial franchise fees), commission on resales of franchised outlets, provision of training, and ongoing support of the franchisees.
MSF are invoiced to individual franchisees on a monthly basis in relation to a percentage of their turnover for any given month. They are recognised in the month in which the income is receivable.
Initial franchise fees are recognised upon signing of the contract as it is at this point that the new franchisee has a legal obligation to make good the terms of the contract. The initial fees are for the use of the brand along with initial training and support and promotion during the opening phase of the new office. As such the Group regards this as a separate initial transaction for which it has fulfilled its obligations.
Revenue also includes fees generated by outlets operated by the Group that are not franchises. These corporate offices invoice landlords on a monthly basis and so recognise the income during the period in which the work is carried out. Corporate revenue also arises from fees on property sales which are recognised by reference to the legal exchange date of the housing transaction as all obligations have been fulfilled at that point.
2 Segmental information
The Executive Board, as the chief operating decision maker, reviews financial information for and makes decisions about the Group's overall franchising business and has identified the operating segments to be that of property lettings franchising and owned operated lettings and estate agency outlets. Management do not report on a geographical basis and no customers represent greater than 10% of total revenue in either of the periods reported.
The segmental information is, therefore, the same as that set out in the consolidated statement of comprehensive income. The directors do not consider the presentation of gross profit within the Group statement of comprehensive income to reflect a true position of the Group's activities and core operations, which is that of a property letting franchisor. Therefore, the directors disclose operating profit as the key performance measure. The reported segment is consistent with the Group's internal reporting for performance measurement and resources allocation.
The directors believe there to be four material income streams which are split as follows:
Lettings Property sales Total revenue Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited H1 H1 FY H1 H1 FY H1 H1 FY 2017 2016 2016 2017 2016 2016 2017 2016 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ========= ========= ======== ========= ========= ======== ========= ========= ======== Management service fees 3,238 2,142 5,405 558 438 1,026 3,796 2,580 6,431 Corporate owned outlets 400 636 1,205 287 592 1,110 687 1,228 2,315 ========= ========= ======== ========= ========= ======== ========= ========= ======== 3,638 2,778 6,610 845 1,030 2,136 4,483 3,808 8,746 ========= ========= ======== ========= ========= ======== ========= ========= ======== Initial franchise fees and resale commissions 115 163 368 Other income 323 322 826 ========= ========= ======== 4,921 4,293 9,940
--------- --------- --------
3 Dividends
The company will pay an interim dividend of 3.4p pence per share (GBP1,187,973) on 27 October 2017 to the shareholders on the register on 16 September 2017.
4 Taxation
Taxation has been calculated by applying the forecast full year effective rate of tax to the results for the period.
5 Earnings per share
Earnings per ordinary share have been calculated by dividing the profit after tax for the financial period, by the weighted average number of shares deemed to be in issue in the period under the pooling of interests method of accounting.
Unaudited Unaudited Audited six six Year months months Ended ended ended 31 December 30 June 30 June 2016 2017 2016 Profit for the financial period (GBP'000) 1,398 818 1,833 *Adjusted profit for the financial period (GBP'000) 1,710 1,011 2,479 Weighted average number of ordinary shares - basic ('000) 34,413 31,062 32,376 Weighted average number of ordinary shares - diluted ('000) 35,351 32,000 33,314 Basic earnings per share 4.1p 2.6p 5.7p Diluted earnings per share 4.0p 2.6p 5.5p *Adjusted basic earnings per share 5.0p 3.5p 8.6p *Adjusted diluted earnings per share 4.8p 3.4p 8.3p ========== ========== =============
*Adjusted for exceptional acquisition costs and amortisation of acquired intangibles.
6 Reconciliation of profit before taxation to cash generated from operations
Unaudited Unaudited Audited 30 June 30 June 31 December 2017 2016 2016 GBP'000 GBP'000 GBP'000 Profit before taxation 1,731 1,071 2,409 Depreciation and amortisation charges 321 215 602 Finance costs 104 32 139 Finance income (158) (151) (291) Loss on disposal of corporate outlets - - 302 Deemed interest charge 68 - 93 Adjustment to deferred consideration - - (2) Share based payments 13 9 25 ========== ========== ============= 2,079 1,176 3,277 Increase in trade and other receivables (68) (628) (604) Increase in trade and other payables (103) 644 273 ---------- ---------- ------------- Cash generated from operations 1,908 1,192 2,946 ---------- ---------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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September 05, 2017 02:00 ET (06:00 GMT)
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