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Real-Time news about Farley Grp (London Stock Exchange): 0 recent articles
|graham99114: as a "small" holder it doesn't look as though I even get a look in at the reduced price - hence deflating the price of my holding - their not getting my vote - pack of thieves - the share price will continue to fall from here to 80p|
|doomsday investments: Estate agency on explosive acquisition-fuelled growth path
Farley Group, soon to be renamed Humberts, is using acquisitions to grow at an explosive rate. As recently as November last year, the group consisted of just one branch, Farley's in Kensington and Chelsea. Not a bad place to have a branch given what is happening to property prices but the business has been transformed by a string of deals into a dramatically larger group with 60 branches.
Operates as an independent chain of estate agents under the names of Farleys and Humberts specialising in the selling, letting and management of residential properties in London, the South and South West England.
Furthermore in a brief chat with hyperactive chief executive, Max Ziff, he was able to tell me that he expects to have 75100 branches by next summer. A partial trigger for this incredible expansionary charge seems to have been the acquisition of a 25 per cent stake in the group by property multimillionaire (billionaire?) Vincent Tchenguiz.
Property highflyer gets involved
Tchenguiz also owns stakes in another listed estate agency and in Chesterton International, which last he acquired after the company was placed into administrative receivership. He bought his Farley shares by way of an injection of £2m into the business in the summer of 2005.
Before that, in March 2004, the group raised £2m, also at 33p, The stated intention for the fund raising was to expand by acquisition in a sector that the directors obviously considered ripe for consolidation. The big deal came in November 2005 when the company acquired Humberts. The deal brought in a chain of 39 offices, 18 of which were owned and 21 of which were franchised.
Initial consideration was £1.8m in cash, 1.67m shares and warrants to acquire 500,000 further shares at the 60p issue price. There was a further deferred consideration of £1.6m payable in cash and shares, £100,000 for additional assets, a further 250,000 warrants and the taking over of Humberts' overdraft up to a maximum £800,000. The total potential consideration was around £4.2m for a business with turnover of £8.1m and operating profits of £576,000.
Building £10m plus war chest plus appointing high-powered CEO
At the same time as the Humberts acquisition the group massively strengthened its war chest with a placing at 60p to raise £8m on top of the monies already raised and Max Ziff was appointed chief executive.
Ziff came with a wide range of experience in corporate restructuring, mergers and acquisitions, liability management and the raising of debt and equity capital across international capital markets. The presence of such a hot shot at the helm makes clear the scale of the group's ambitions. The size of the Humberts deal made it a reverse takeover.
Since then Mr. Ziff has been showing why he became chief executive with a string of further deals including buying in some further bits of Humberts that were excluded from the original deal. The upshot of the string of deals between November 2005 and September 2006, mostly involving smaller chains of estate agents, is that the group now has 60 branches mostly in the south and south west of the country in places like Petersfield, Chichester, Cirencester, Wadhurst, Tenterden, Hungerford, Newbury and across Somerset.
Targeting properties priced between £0.5m and £1.5m
The group is aiming its services at the high but not absolute top end of the market targeting properties priced between £500,0000 and £1.5m.
This is an active and rapidly growing market. New agencies are being rebranded as Humberts, which should help with future marketing. In addition the company expects a charge of around £1m as it rationalises the chain and takes steps to introduce better technology and improve profitability.
In the longer term the company intends to improve its high quality recurring income by doing more letting and property management business. Acquisitions are also likely to be targeted at growing this side of the business.
Profit forecasts could be well-beaten
The share price received a lift recently with the announcement that second half trading for the year ending 30 September 2006 was expected to exceed expectations. The forecasts in the table do not take this into account so should be beaten, perhaps by a significant margin.
The timing for building a new estate agency grouping looks excellent with a strong likelihood that the strength of the London market, likely to directly benefit the Farley branch of the business, will ripple out across the south driving activity in just the price ranges in which the group is specialising.
Patricia Farley, Tchenguiz and Max Ziff all bought shares in the latest 60p placing showing their confidence in prospects. The rating is undemanding and there is excellent scope for even revised profit projections to be well beaten as more deals are done. The shares look an exciting buy at an early stage in a major expansionary push.|
Farley share price data is direct from the London Stock Exchange