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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hunters Property Plc | LSE:HUNT | London | Ordinary Share | GB00BYMW5L71 | ORD 4P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 70.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMHUNT
RNS Number : 0466Q
Hunters Property PLC
07 September 2017
Embargoed: 7.00a.m.
7 September 2017
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).
Interim Results for the period ended 30 June 2017
Highlights:
Hunters Property Plc ("Hunters" or the "Company" or the "Group"), one of the UK's largest national sales and lettings estate agency and franchise businesses, is pleased to announce its interim results for the six months ended 30 June 2017.
'Confident of meeting expectations for the full year'
Financial Highlights:
-- Network Income up 4% to GBP17.6m (six months to June 2016: GBP16.9m); -- Revenue up 1% to GBP6.7m (2016: GBP6.6m);
-- Adjusted operating profit (operating profit before depreciation, interest, amortisation and acquisition costs and share based payments) GBP800,000 (2016: 923,000);
-- Adjusted earnings per share 2.09p (2016: 2.52p); and -- Interim dividend up 17% to 0.7p per share (2016: 0.6p per share).
Operational Highlights:
-- Acquired the Besley Hill network of 15 branches, in and around the Bristol area;
-- Opened a total of 24 new branches in this period, including the conversions of six existing businesses expanding our branch network to 206 (June 2016: 180);
-- Grown lettings income across the network by 16%; and
-- Developed our Online capability and launched a 24/7 vendor portal. This facilitates customer online tracking and compliments our online booking and online valuation capability.
Trading update
-- With a full second half contribution from Besley Hill and a robust pipeline the Board has confidence in the full year outcome;
-- Independent Businesses continue to join the Hunters network to mitigate the current uncertainty and challenging backdrop; and
-- Strong net asset position and facilities available to continue our growth.
Glynis Frew, Chief Executive of Hunters Property Plc, commented:
"We have delivered robust results in the six months to June 2017 against a backdrop of markets that contracted in terms of new instructions during this period by 9.5% as against the same period last year. We are bolstered in part with our strategy to grow and develop the franchise network and we are encouraged by the pipeline of future franchisees interested in joining the network. We are delighted at the increase in strength of prospects we have registered reinforcing our view, especially in this environment, of the comparative benefits of joining the Hunters network.
The first half year includes a part contribution from Besley Hill. We are confident of meeting our expectations for the full year. The continuing work and support displayed by our staff and the franchise network is a credit to the Group. I offer, on behalf of the Board, our gratitude to everyone that has been involved."
For further details:
Hunters Property Plc Tel: 01904 756 197 Kevin Hollinrake, Chairman Glynis Frew, Chief Executive Officer Ed Jones, Chief Financial Officer Dowgate Capital Stockbrokers Tel: 020 3903 7715 James Sergeant (Corporate Broking) SPARK Advisory Partners Limited Tel: 020 3368 3551 Mark Brady and Neil Baldwin (Nominated Adviser) Smithfield Consultants Limited Tel: 020 7360 4900 Alex Simmons
Chairman's Statement
Overview
On behalf of the Board I am delighted to comment on Hunters' half year results for 2017. The first six months have seen the Group build successfully on the track record built up over the last 25 years; Network Income in the six months to June grew by 4% to GBP17.6m (six months to June 2016: GBP16.9m), 24 new branches joined the network including Besley Hill, a 15 office network in and around Bristol.
The Company has delivered robust results in what has been a challenging market. The comparative period was aided last year by the increase in sales due to the changes to Stamp Duty legislation. Turnover has increased by 1% to GBP6.7m (2015: GBP6.6m) culminating in EBITDA of GBP800,000 (2016: GBP923,000). The Group's strategy is to grow a predominantly franchise network and during this period opened 24 branches (2016: 17), including 15 relating to Besley Hill and six that were existing businesses converting to Hunters. As at the end of June, the network stood at 206 (June 2016: 180) branches, of which 195 (2016: 169) are franchised.
This half year we are pleased to report our continued development of online capabilities, including online booking of valuations and our vendor portals, allowing customers to track their property transactions 24/7. Our strategy combines leading online technologies with genuine local area expertise. We continue to drive professional standards with over 500 delegates engaging with the Hunters Training Academy which has now received authorisation as an approved trainer under RentSmart Wales. Our web users increased by 21% in the period to July against the same period last year and our Customer Service Rating to June rose to 96% (to June 2016: 95%) keeping us significantly ahead of the 2015 Property Academy Survey which puts the national average at 73%.
Outlook
With a full second half contribution from Besley Hill and a robust pipeline the Board has confidence in the full year outcome. Economic uncertainty provides one more reason why good quality independent businesses see the benefit of joining the Hunters network and so it is proving from the number and calibre of enquiries we are receiving. We continue to look for further strategic earnings enhancing acquisitions should they become available.
The Board declares an interim dividend of 0.7p (2016: 0.6p) per share, an increase of 17% as part of its policy to pay a progressive dividend whilst maintaining dividend cover of at least two times. The dividend will be paid on 20 October 2017 to shareholders on the Register on 22 September 2017.
I look forward to updating you further in due course.
Kevin Hollinrake
Chairman
Financial Report for the six months ended 30 June 2017
Hot Features
Premium
H1 2017 H1 2016
Network Income GBP17.61m GBP16.99m +4%
Turnover GBP6,688,000 GBP6,598,000 +1%
EBITDA GBP800,000 GBP923,000 (13%)
Profit before tax, adjusted GBP663,000 GBP808,000 (18%)
Profit before tax GBP191,000 GBP389,000 (51%)
Cash generated (GBP301,000) (GBP315,000) +4%
Net debt GBP3,047,000 Dec-16 GBP1,172,000
Shareholders' funds GBP6,985,000 Dec-16 GBP5,648,000 +24%
Shares in issue 31,691,138 28,286,992
Weighted average number of shares 30,241,422 28,286,992
Earnings after tax GBP157,000 GBP294,000 (47%)
Earnings after tax, adjusted(excluding
amortisation, acquisition costs,
finance timing and investment
income) GBP629,000 GBP711,000 (12%)
EPS 0.52p 1.04p (50%)
Adjusted EPS 2.09p 2.52p (17%)
Dividend 0.7p 0.6p +17%
Branches 206 180 +14%
Revenue
Gross revenue for sales and lettings from the Group's network ("Network income") rose by 4% to GBP17.6m as against GBP16.9m for the same first half period last year. Turnover rose by 1% to GBP6.7m (2016: GBP6.6m) in part due to the effect of Besley Hill joining the group at the end of March 2017.
Profit before tax, adjusted to exclude amortisation, amortised finance costs, acquisition costs and other finance income
Adjusted profit before tax for the six months ended June 2017 was GBP663,000, a decrease of 18% on the equivalent period last year (2016: GBP808,000) due to the surge in sales in the comparative period as a result of the stamp duty increase skewing the normal seasonality of the business last year.
Adj. EBITDA, earnings before interest, tax and depreciation/amortisation
Adj. EBITDA for the six months to June 2017 was GBP800,000, a decrease of 13% on the same period last year (2016: GBP923,000).
Earnings per share
Basic earnings per share for the six months ended 30 June 2016 was 0.52p (2016: 1.04p). Adjusted earnings per share, excluding amortisation and acquisition costs, finance timing investment income and share-based payment expenses for the six months to June 2017 was 2.09p (2016: 2.52p) a decrease of 17% due in part to the issue of shares around the Besley Hill acquisition part way through the period.
Dividend
The Board declares an interim dividend of 0.7p (Interim 2016: 0.6p) per share, an increase of 17%, payable on 20 October 2017 to shareholders on the Register on 22 September 2017.
Cash flow
The Company generated net cash from operations of GBP23,000 during the six months to June 2017. There were further debt drawdowns in the six months to June 2017 totalling GBP1,617,000 and a further GBP1,305,000 raised in issued capital by way of a placing. GBP2,250,000 was used to fund the acquisition of Besley Hill, with the remaining funds being used to open more franchisee offices and acquire another lettings book. Following the period end the Company made its final deferred payment of GBP295,000 for the Hunters Midlands acquisition.
Liquidity and capital reserves
As at 30 June 2017, the Group's cash balance was GBP886,000 (June 2016: GBP896,000) with net debt of GBP3.05m (December 2016: GBP1.17m) including vendor Loan Notes, repayable by July 2017, GBP0.29m (December 2016: GBP0.29m).
Risks
The primary risk to the business continues to be the state of the UK property market. Caution has crept into the market place since the triggering of Article 50 and an element of expected uncertainty as a result of the Brexit negotiations, as well as the proposal to ban unfair tenant fees. We do not expect either of these events to conclude this year and our balance between franchising, sales and lettings and geographical mix allows us to mitigate against these risks.
Ed Jones
Chief Financial Officer
Consolidated Statement of Comprehensive Income as at 30 June 2017
Notes Year
6 months 6 months ended
ended ended 31 December
30 June 2017 30 June 2016 2016
GBP'000s GBP'000s GBP'000s
Revenue 6,688 6,598 13,833
Ongoing administrative expenses (5,888) (5,675) (11,772)
Operating profit before
depreciation, amortisation,
costs of business combinations
& share-based payments 800 923 2,061
Depreciation & adjustments
on disposal (63) (71) (104)
Amortisation & adjustments
on disposal (349) (287) (584)
Business combination acquisition
expenses (49) (15) (30)
Share-based payment expense (63) (87) (192)
------------- ------------- ------------
Operating profit 276 463 1,151
Investment revenues - 3 4
Finance costs (85) (77) (168)
------------- ------------- ------------
Profit before taxation 191 389 987
Taxation (34) (95) (181)
------------- ------------- ------------
Profit for the period 157 294 806
Other comprehensive income - - -
Total comprehensive income
for the period attributable
to equity owners of the
parent 157 294 806
------------- ------------- ------------
Basic earnings per share 5 0.52p 1.04p 2.84p
Diluted earnings per share 5 0.50p 0.99p 2.72p
------------- ------------- ------------
Consolidated Statement of Financial Position as at 30 June 2017
Notes 30 June 2017 31 December 30 June
2016 2016
GBP'000s GBP'000s GBP'000s
ASSETS
Non-current assets
Goodwill 3 4,626 3,973 3,973
Intangible assets 3 6,449 4,078 3,899
Property, plant and equipment 383 429 286
Investments 1 1 1
Deferred tax assets 62 82 31
------------ ----------- --------
11,521 8,563 8,190
------------ ----------- --------
Current assets
Trade and other receivables 1,687 1,452 1,678
Cash and cash equivalents 886 1,187 896
2,573 2,639 2,574
Total assets 14,094 11,202 10,764
------------ ----------- --------
LIABILITIES
Current liabilities
Borrowings 373 366 1,027
Finance lease liabilities 28 47 39
Current tax liabilities 134 117 276
Trade and other payables 2,000 2,376 2,102
2,535 2,906 3,444
------------ ----------- --------
Non-current liabilities
Borrowings 3,560 1,993 1,617
Finance lease liabilities 72 81 10
Other payables 43 52 60
3,675 2,126 1,687
------------ ----------- --------
Provisions for liabilities
Provisions 50 66 79
Deferred tax liabilities 849 456 472
899 522 551
Net assets 6,985 5,648 5,082
------------ ----------- --------
EQUITY
Share capital 1,268 1,145 1,131
Share premium 4,068 2,633 2,579
Merger reserve 899 899 899
Retained earnings 750 971 473
Total equity attributable
to owners of the parent 6,985 5,648 5,082
------------ ----------- --------
Consolidated Statement of Changes in Equity for the Period ended 30 June 2017
Share Share Merger Retained Total equity
capital premium reserve earnings attributable
to owners
of the parent
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January 2016 1,131 2,579 899 375 4,984
Profit and total comprehensive income - - - 294 294
Credit to equity for equity settled share-based
payments - - - 87 87
Dividends paid - - - (283) (283)
At 30 June 2016 1,131 2,579 899 473 5,082
--------- --------- --------- ---------- ---------------
Profit and total comprehensive income - - - 512 512
Dividends paid - - - (170) (170)
Credit to equity for equity settled share-based
payments - - - 105 105
Issue of share capital 14 53 - - 67
Deferred tax on share-based payment
transactions - - - 52 52
Exercise of share options - 1 - (1) -
At 31 December 2016 1,145 2,633 899 971 5,648
--------- --------- --------- ---------- ---------------
Profit and total comprehensive income - - - 157 157
Dividends paid - - - (412) (412)
Credit to equity for equity settled share-based
payments - - - 63 63
Issue of share capital 123 1,432 - - 1,555
Deferred tax on share-based payment
transactions - - - (26) (26)
Exercise of share options - 3 - (3) -
At 30 June 2017 1,268 4,068 899 750 6,985
--------- --------- --------- ---------- ---------------
Consolidated Statement of Cashflows for the Period ended 30June 2017
6 months 6 months Year ended
ended ended 30 December
30 June 2017 30 June 2016 2016
GBP'000s GBP'000s GBP'000s
Cash flow from operating activities
Operating profit 276 463 1,151
Adjustment for:
Depreciation of property, plant
and equipment 71 70 134
Amortisation of intangible assets 350 294 597
(Gain)/Loss on disposal of property,
plant and equipment (1) 1 (17)
Profit on disposal of intangible
assets (8) (7) (13)
Share options fair value expense 63 87 192
(Released)/expensed element of
provisions (17) 2 (16)
Costs of acquisitions 49 15 30
Changes in working capital:
(Increase)/Decrease in trade and
other receivables (235) (49) 177
Decrease in trade and other payables (374) (390) (130)
------------- ------------- ------------
Cash generated from/(used in)
operations 174 486 2,105
Interest paid (83) (45) (111)
Income tax paid (68) (30) (292)
Net cash from operating activities 23 411 1,702
------------- ------------- ------------
Cash flow from investing activities
Capital expenditure (tangible
& intangible) (311) (411) (1,011)
Proceeds from sale of tangible
& intangible assets 20 26 62
Business combinations, net of
cash acquired (2,459) (325) (325)
Repayments for deferred consideration (11) (11) (23)
Interest received - 3 4
Net cash used in investing activities (2,761) (718) (1,293)
------------- ------------- ------------
Cash flow from financing activities
Dividends paid to shareholders (412) (283) (453)
Repayment of borrowings (45) (275) (1,807)
Issue of borrowings 1,617 570 2,175
Issue of share capital 1,305 - 68
Repayments for deferred consideration
debentures - - (375)
Repayment of capital element of
finance lease contracts (28) (20) (41)
Net cash from / (used in) investing
activities 2,437 (8) (433)
------------- ------------- ------------
(Decrease) in cash and cash equivalents (301) (315) (24)
Net cash and cash equivalents
at beginning of the period 1,187 1,211 1,211
Net cash and cash equivalents
at end of period 886 896 1,187
------------- ------------- ------------
Notes to the Financial Statements for the Period ended 30 June 2017
1. Corporate information
Hunters Property Plc is a Company incorporated in the United Kingdom. The registered address of the Company is Apollo House, Eboracum Way, York, YO31 7RE. The consolidated financial statements (or "financial statements") incorporate the financial statements of the Company and entities (its subsidiaries) controlled by the Company (collectively comprising the "Group").
The principal activity of the Group is the provision of property services to consumers and businesses which include sales, lettings, franchising and related services.
2. Accounting policies 2.1. Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.
Basis of measurement
The financial statements have been prepared on the historical cost basis, modified to include the revaluation of certain financial instruments at fair value.
Functional and presentational currency
The financial statements are presented in sterling, which is the functional currency of the Parent Company. Monetary amounts in these financial statements are rounded to the nearest GBP1,000.
Use of estimates and judgments
The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
Basis of preparation
The financial information set out in these interim consolidated financial statements for the six months ended 30 June 2017 is unaudited. The financial information presented are not statutory accounts prepared in accordance with the Companies Act 2006, and are prepared only to comply with AIM requirements for interim reporting.
Basis of consolidation
The Group financial information consolidates those of the Parent Company and the subsidiaries that the Parent has control of. Control is established when the Parent is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary.
Where a subsidiary is acquired/disposed of during the period, the consolidated profits or losses are recognised from/until the effective date of the acquisition/disposal.
All inter-company balances and transactions between group companies have been eliminated on consolidation.
Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by the Group.
2.2. Business combinations
The Group applies the acquisition method of accounting for business combinations enacted after the date of creation of the Group following incorporation of Hunters Property Plc, as detailed further below. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair value of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree, and the equity interest issued by the Group. Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquired subsidiary's financial information prior to the acquisition. Assets acquired and liabilities assumed are measured at their acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the fair value of consideration transferred, over the Group's share of the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
The Group has applied the principles of merger accounting in consolidating the results, as control was only acquired by Hunters Property Plc via a share-for-share exchange on 27 March 2015. Merger accounting requires that the results of the Group are presented as if the Group has always been in its present form, and does not require a re-evaluation of fair values as at the point of acquisition. Accordingly, for the Group's comparative statement of financial position as at 30 June 2015, a merger reserve has been created which represents the difference between the net assets of the Group as at that date, and the retained profits recognised by the Group as at that date.
2.3. Revenue
Revenue represents the amount receivable for the provision of services and the sale of goods during the period, excluding VAT and trade discounts. Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue can be measured reliably.
Revenue from residential, commercial, and land sales is recognised on the basis of exchange of contract. Financial services revenue is recognised at the later of the policy inception date or confirmation of entitlement to the commission.
Revenue from commission earned as letting agents is recognised in the month in which the income is received and when there is fulfilment of all but inconsequential or perfunctory actions.
At inception of a franchisee contract, revenue is recognised upfront which matches to the estimated cost of time and knowledge to create the franchiser-franchisee contractual arrangement. No amounts are deferred as the directors are of the opinion that virtually all inception costs are incurred at the outset, and hence although contracts run for several years this policy is considered to be the fairest presentation to comply with the matching and accruals concepts.
Revenue from franchisee management service fees are recognised monthly in arrears, calculated by reference to the terms of the contract and the value of sales attributable to each franchisee.
Deferred income arises where services are invoiced in advance of performance. The amount is released to the profit or loss in subsequent periods in reference to the stage of completion of the transaction at the reporting date.
2.4. Goodwill
Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identifiable and separately recognised. After initial recognition, goodwill is measured at cost less accumulated impairment losses.
2.5. Intangible fixed assets other than goodwill
Intangible assets are initially measured at cost. Where intangible assets are acquired as part of a business combination, cost is determined by reference to a fair value estimation technique. After initial recognition, intangible assets are recognised at cost less any accumulated amortisation and any accumulated impairment losses.
The depreciable amount of an intangible asset with a finite useful life is allocated on a systematic basis over its useful life. Amortisation begins when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.
The amortisation period and the amortisation method for intangible assets with a finite useful life is reviewed each financial period-end. If the expected useful life of the asset is different from previous estimates, the amortisation period is changed accordingly.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software 3 - 7 years or over the life of the licence Franchise development Over the life of the franchise contract costs (typically 10-15 years) Brands 10 years Customer lists 2-12 years 2.6. Property plant and equipment
Property, plant and equipment are recognised as an asset only if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
An item of property, plant and equipment that qualifies for recognition as an asset is measured at its cost. Cost of an item of property, plant and equipment comprises the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
After recognition, all property, plant and equipment are carried at costs less any accumulated depreciation and any accumulated impairment losses.
Depreciation is provided at rates calculated to write down the cost of assets, less estimated residual value, over their expected useful lives on the following basis:
Leasehold land and buildings Straight line over the period
of the lease
Plant and machinery 25% reducing balance
Fixtures, fittings and equipment 25% reducing balance or 10-33%
straight line
Motor vehicles 25% straight line
The residual value and the useful life of an asset are reviewed at least at each financial period-end and if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying value of the asset and are recognised in profit or loss.
2.7. Impairment of goodwill, other intangible assets and property, plant and equipment
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash flows. As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill.
Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An asset or cash-generating unit is impaired when its carrying amount exceeds its recoverable amount. The recoverable amount is measured as the higher of fair value less cost of disposal and value in use. The value in use is calculated as being net projected cash flows based on financial forecasts discounted back to present value.
The impairment loss is allocated to reduce the carrying amount of the asset, first against the carrying amount of any goodwill allocated to the cash-generating unit, and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment loss is reversed if the asset's or cash-generating unit's recoverable amount exceeds its carrying amount.
2.8. Investments
Investments in equity instruments that have a quoted market price in an active market and whose fair value can be reliably measured are measured at fair value; otherwise investments in equity instruments are measured at cost.
2.9. Financial instruments
Financial assets
Financial assets are recognised in the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instrument.
All financial assets excluding investments are classified as loans and receivables; these comprise trade and other receivables and cash and cash equivalents. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Financial assets are initially recognised at fair value plus directly attributable transaction costs.
After initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
If there is objective evidence that there is an impairment loss on loans and receivables, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an allowance account.
A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.
Financial liabilities
Financial liabilities include borrowings and trade and other payables.
Financial liabilities are obligations to pay cash or other financial assets and are recognised in the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities are initially recognised at fair value adjusted for any directly attributable transaction costs.
After initial recognition, financial liabilities are measured at amortised cost using the effective interest method, with the effective interest recognised as an expense in finance costs. Discounting is omitted where the effect of discounting is immaterial.
A financial liability is derecognised only when the contractual obligation is extinguished, that is, when the obligation is discharged, cancelled or expires.
2.10. Provisions
Provisions are recognised when the Group has a legal or constructive present obligation as a result of a past event, it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
2.11. Employee benefits
The cost of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.
Termination benefits are recognised immediately as an expense when the Company is demonstrably committed to terminate the employment of an employee, or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are expensed as they fall due.
2.12. Leased assets
Finance leases
The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of ownership of the leased asset. Where the Group is a lessee in this type of arrangement, the related asset is recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance lease liability.
This liability is reduced by lease payments net of finance charges. The interest element of lease payments represents a constant proportion of the outstanding capital balance and is charged to profit or loss, as finance costs over the period of the lease.
Operating leases
All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.
2.13. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
2.14. Income tax
Current income tax assets and/or liabilities comprise obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid/due at the reporting date. Current tax is payable on taxable profits, which may differ from profit or loss in the financial statements. Calculation of current tax is based on the tax rates and tax laws that have been enacted or substantively enacted at the reporting period.
Deferred taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases.
A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). However, for deductible temporary differences associated with investments in subsidiaries a deferred tax asset is recognised when the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
2.15. Share-based payments
The fair value of equity settled share based payments to employees is determined at the date of grant and is expensed on a straight-line basis over the vesting period based on the Group's estimate of shares or options that will eventually vest.
2.16. Equity instruments
Share capital represents the nominal value of shares that have been issued. Share premium represents the excess consideration received over share capital upon the sale of shares, less any incidental costs of issue.
Retained earnings include all current and prior period retained profits.
The non-controlling interest reserve is the portion of equity ownership in subsidiaries which is not attributable to the owners of the Parent Company.
The merger reserve has arisen as described in note 2.2.
3. Intangible Fixed Assets
Goodwill Software FDG's & Brands Customer
Rebrands Lists Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Cost
At 1 January 2017 4,008 620 1,939 637 2,040 9,244
Additions - separately
acquired - 28 257 - - 285
Additions - business
combinations 653 - - - 2,447 3,100
Disposals - - (17) - - (17)
At 30 June 2017 4,661 648 2,179 637 4,487 12,612
-------- -------- --------- ---------------- -------- --------
Amortisations and Impairment
At 1 January 2017 35 125 253 141 639 1,193
Amortisation charged
for the year - 47 87 64 152 350
Amortisation on disposal - - (6) - - (6)
At 30 June 2017 35 172 334 205 791 1,537
-------- -------- --------- ---------------- -------- --------
Carrying amount
At 30 June 2017 4,626 476 1,845 432 3,696 11,075
-------- -------- --------- ---------------- -------- --------
At 31 December 2016 3,973 495 1,686 496 1,401 8,051
-------- -------- --------- ---------------- -------- --------
Franchise Development Grants ("FDG's") and rebrand costs are externally incurred expenses at the inception of certain contracts with franchisees in order to assist with the transition to using the Hunters brand name. The amounts invested are amortised over the minimum life of the underlying franchise contract, typically 10 to 15 years.
4. Business combinations
Acquisition of Besley Hill:
On 24 March 2017 the Group acquired Besley Hill. The consideration paid totalled GBP2,500,000, being settled by GBP2,250,000 paid in cash, and an issue of GBP250,000 worth of Ordinary shares in Hunters Property Plc.
As part of the acquisition, the Directors have identified an intangible asset, being the franchisee contracts, including a renewal expectation, being determined by using the average value of the contracts, growing at 2% per annum and discounted at 12% per annum to determine the present value.
From the date of acquisition Besley Hill has contributed GBP105,090 of revenue and GBP70,335 of profit before tax and amortisation.
Acquisition of Besley Hill: Carrying Fair value
value Fair value recognised
adjustments on acquisition
GBP'000s GBP'000s GBP'000s
Assets
Intangible assets - 2,253 2,253
--------- ------------ ---------------
Total assets - 2,253 2,253
--------- ------------ ---------------
Liabilities
Deferred tax liability - (406) (406)
--------- ------------ ---------------
Total liabilities - (406) (406)
--------- ------------ ---------------
Total identifiable net assets - 1,847 1,847
--------- ------------ ---------------
Goodwill arising on acquisition 653
Purchase consideration transferred 2,500
---------------
In addition, there were costs of acquisition of GBP44,818 relating to the acquisition which have been included on the face of the Consolidated Statement of Comprehensive Income, and costs of acquisition of GBP15,000 were recognised in the year to 31 December 2016 in respect of the pre-completion expenses incurred on this combination.
Acquisition of a lettings book:
In March 2017 the Group acquired a lettings book. The consideration paid totalled GBP160,000, being settled in cash.
As part of the acquisition, the Directors have identified an intangible asset, being the lettings book. This was determined to be equal to the amount paid for the book, after adjustment for deferred tax. Historical data and forecasts have been used, together with the 10% group discount rate and an assumption of a useful life of 12 years for the lettings book to estimate the fair value of this intangible. Due to the small size of the lettings book, the Directors have been unable to quantify the direct impact on results arising from this acquisition.
Acquisition of a lettings Carrying Fair value
book: value Fair value recognised
adjustments on acquisition
GBP'000s GBP'000s GBP'000s
Assets
Intangible assets - 194 194
--------- ------------ ---------------
Total assets - 194 194
--------- ------------ ---------------
Liabilities
Deferred tax liability - (34) (34)
--------- ------------ ---------------
Total liabilities - (34) (34)
--------- ------------ ---------------
Total identifiable net (assets) - - 160
--------- ------------ ---------------
Goodwill arising on acquisition -
Purchase consideration transferred 160
---------------
In addition, there were costs of acquisition of GBP4,660 relating to the acquisition which have been included on the face of the Consolidated Statement of Comprehensive Income.
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings 30 June 2017 30 June 2016
GBP'000s GBP'000s
Earnings for the purpose of basic earnings
per share being net profit attributable
to owners of the parent 157 294
Effects of dilutive potential ordinary - -
shares
Earnings for the purposes of diluted earnings
per share 157 294
------------ ------------
Number of shares 30 June 2017 30 June 2016
GBP GBP
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 30,241,422 28,286,992
Effects of dilutive potential ordinary
shares 1,076,661 1,475,988
Weighted average number
of ordinary shares for the
purposes of diluted earnings
per share 31,318,083 29,762,980
------------ ------------
Earnings per share
Pence per weighted average shares 0.52p 1.04p
----- -----
Pence per weighted average diluted
shares 0.50p 0.99p
----- -----
The Directors use adjusted earnings before time-value interest, investment revenue, amortisation, and costs of acquisition ("Adjusted Earnings") as a measure of ongoing profitability and performance. The calculated Adjusted Earnings for the current period of accounts is as follows:
Adjusted Earnings per Share 30 June 2017 30 June 2016
GBP'000s GBP'000s
Profit after taxation 157 294
Adjusted for:
Time-value interest costs 13 31
Investment revenues - (3)
Amortisation 349 287
Costs of acquisition 49 15
Share-based payment expense 63 87
Adjusted Earnings 631 711
------------ ------------
Adjusted Earnings per share
Pence per weighted average shares 2.09p 2.52p
----- -----
Pence per weighted average diluted
shares 2.02p 2.39p
----- -----
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BQLLBDKFBBBX
(END) Dow Jones Newswires
September 07, 2017 02:01 ET (06:01 GMT)
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